Consolidated Net Sales Decline of 1.6%
GAAP Diluted EPS of $3.19; Adjusted Diluted EPS of $2.79
GAAP Operating Margin Expansion of 570 Basis Points Cash
Flow from Operations of $74.7 Million; $232.5 Million
Year-to-Date Free Cash Flow(1)(2) of $65.6 Million; $202.8
Million Year-to-Date
Fiscal 2024
Outlook: Narrows Consolidated Net Sales to
$1.975-$2.0 Billion Narrows GAAP Diluted EPS to $6.67-$7.05
and Adjusted Diluted EPS to $8.60-$8.85 Lowers Adjusted
EBITDA(1) to $330-$335 Million; Growth of 0.8% to 2.3%
Maintains Free Cash Flow(1)(2) of $250-$270 Million
Maintains Net Leverage Ratio(1)(3) Reduction to Between 2.0X and
1.85X by the End of Year Project Pegasus on Track to Deliver
$20 Million Fiscal 2024 Savings Target
Helen of Troy Limited (NASDAQ: HELE), designer,
developer, and worldwide marketer of branded consumer home,
outdoor, beauty, and wellness products, today reported results for
the three-month period ended November 30, 2023.
Executive Summary – Third Quarter of
Fiscal 2024 Compared to Fiscal 2023
- Consolidated net sales revenue of $549.6 million, a decrease of
1.6%
- Gross profit margin improvement of 210 basis points to 48.0%
compared to 45.9%
- Operating margin improvement of 570 basis points to 19.5%
compared to 13.8%
- Non-GAAP adjusted operating margin of 16.3% compared to
16.6%
- GAAP diluted EPS of $3.19 compared to $2.15
- Non-GAAP adjusted diluted EPS of $2.79 compared to $2.75
- Net cash provided by operating activities of $74.7 million
compared to $125.0 million
- Non-GAAP adjusted EBITDA margin of 17.8% compared to 17.9%
Noel M. Geoffroy, current Chief Operating Officer and incoming
Chief Executive Officer, stated: “I am pleased to report third
quarter consolidated net sales and adjusted EPS that were slightly
better than our expectation. During the quarter, we further
expanded our gross margin by over 200 basis points, controlled
expenses while still investing in our strategic initiatives, and
built on the strong cash flow generation we have been delivering
over the past five quarters with a further $66 million of free cash
flow. This is a solid outcome in what continues to be a challenging
macro consumer environment. We are pleased to be in a position to
end the fiscal year within the ranges of our original full year
outlook for net sales, adjusted EPS, and free cash flow. I believe
this is a testament to the initiatives we have chosen, the talent
and dedication of our global associates, and the strength of our
brand portfolio. Looking longer term, we are energized and
motivated as we enter the Elevate for Growth Era.”
Julien R. Mininberg, Chief Executive Officer, stated: “As my
planned retirement approaches on March 1, 2024, I am proud of the
Company’s Transformation over the past decade and the significant
value it created for all stakeholders. We transformed Helen of Troy
from a holding company into a unified global operating company with
an outstanding portfolio of market-leading brands. We also created
a highly capable global organization that is powered by a culture
that makes the Company an employer of choice. I am most proud of
our talented associates; their enduring passion, engagement, and
ownership mindset are inspiring. I remain confident the best is
still to come, and I look forward to Helen of Troy’s continued
success under Noel’s leadership.”
Three Months Ended November
30,
(in thousands) (unaudited)
Home & Outdoor
Beauty & Wellness
Total
Fiscal 2023 sales revenue, net
$
228,937
$
329,669
$
558,606
Organic business (4)
4,518
(18,076
)
(13,558
)
Impact of foreign currency
2,493
2,073
4,566
Change in sales revenue, net
7,011
(16,003
)
(8,992
)
Fiscal 2024 sales revenue, net
$
235,948
$
313,666
$
549,614
Total net sales revenue growth
(decline)
3.1
%
(4.9
)%
(1.6
)%
Organic business
2.0
%
(5.5
)%
(2.4
)%
Impact of foreign currency
1.1
%
0.6
%
0.8
%
Operating margin (GAAP)
Fiscal 2024
21.0
%
18.3
%
19.5
%
Fiscal 2023
13.5
%
14.1
%
13.8
%
Adjusted operating margin (non-GAAP)
(1)
Fiscal 2024
16.9
%
16.0
%
16.3
%
Fiscal 2023
17.4
%
16.0
%
16.6
%
Three Months Ended November
30,
% Change
4-Year
CAGR
(in thousands, except per share data)
(unaudited)
2023
2022
FY24/FY23
Consolidated net sales revenue
$
549,614
$
558,606
(1.6
)%
3.7
%
Net income
75,898
51,826
46.4
%
2.5
%
Adjusted EBITDA (non-GAAP) (1)
97,817
99,742
(1.9
)%
0.9
%
Net cash provided by operating
activities
74,727
124,975
(40.2
)%
4.3
%
Diluted EPS
$
3.19
$
2.15
48.4
%
4.2
%
Adjusted Diluted EPS (non-GAAP) (1)
2.79
2.75
1.5
%
(2.8
)%
Nine Months Ended November
30,
% Change
4-Year
CAGR
(in thousands, except per share data)
(unaudited)
2023
2022
FY24/FY23
Consolidated net sales revenue
$
1,515,849
$
1,588,084
(4.5
)%
4.6
%
Net income
125,860
107,093
17.5
%
(5.1
)%
Adjusted EBITDA (non-GAAP) (1)
241,905
254,098
(4.8
)%
1.6
%
Net cash provided by operating
activities
232,459
49,523
*
23.0
%
Diluted EPS
$
5.25
$
4.45
18.0
%
(3.9
)%
Adjusted Diluted EPS (non-GAAP) (1)
6.45
7.44
(13.3
)%
(3.4
)%
* Calculation is not meaningful.
Consolidated Results - Third Quarter
Fiscal 2024 Compared to Third Quarter Fiscal 2023
- Consolidated net sales revenue decreased $9.0 million, or 1.6%,
to $549.6 million, compared to $558.6 million, primarily driven by
a decrease from Organic business of $13.6 million, or 2.4%. The
decline in Organic business was primarily due to a decline in sales
of hair appliance, humidification and air filtration products in
Beauty & Wellness driven by softer consumer demand, later start
to the illness season, and SKU rationalization efforts. Net sales
revenue was also impacted by a decline in brick and mortar sales in
the insulated beverageware category in Home & Outdoor. These
factors were partially offset by an increase in consolidated online
channel sales, stronger consumer demand for products in the home
and travel categories in Home & Outdoor, and higher sales of
thermometry, heaters, and water filtration products in Beauty &
Wellness.
- Consolidated gross profit margin increased 210 basis points to
48.0%, compared to 45.9%. The increase in consolidated gross profit
margin was primarily due to lower inbound freight costs, the
favorable impact of SKU rationalization efforts in Beauty &
Wellness, and a more favorable customer mix within Home &
Outdoor. These factors were partially offset by a less favorable
product mix within Beauty & Wellness.
- Consolidated selling, general and administrative expense
(“SG&A”) ratio decreased 250 basis points to 27.8%, compared to
30.3%. The decrease in the consolidated SG&A ratio was
primarily due to a gain on the sale of distribution and office
facilities in El Paso, Texas of $34.2 million, lower salary and
wage costs primarily as a result of Project Pegasus role
reductions, the favorable comparative impact of EPA compliance
costs of $1.7 million incurred in the prior year period, and lower
outbound freight costs. These factors were partially offset by the
unfavorable comparative impact of a gain from insurance recoveries
of $9.7 million recognized in the prior year period, an increase in
annual incentive compensation expense, higher marketing expense, a
charge of $1.4 million related to the bankruptcy of Rite Aid, and
increased distribution expense.
- Consolidated operating income was $106.9 million, or 19.5% of
net sales revenue, compared to $77.2 million, or 13.8% of net sales
revenue. The 570 basis point increase in consolidated operating
margin was primarily due to a gain on the sale of distribution and
office facilities in El Paso, Texas of $34.2 million, lower inbound
and outbound freight costs, a decrease in restructuring charges of
$6.6 million, lower salary and wage costs primarily as a result of
Project Pegasus role reductions, the favorable comparative impact
of EPA compliance costs of $2.1 million incurred in the prior year
period, the favorable impact of SKU rationalization efforts in
Beauty & Wellness, and a more favorable customer mix within
Home & Outdoor. These factors were partially offset by the
unfavorable comparative impact of a gain from insurance recoveries
of $9.7 million recognized in the prior year period, an increase in
annual incentive compensation expense, higher marketing expense,
increased distribution expense, a charge of $1.4 million related to
the bankruptcy of Rite Aid, and a less favorable product mix within
Beauty & Wellness.
- Interest expense was $12.9 million, compared to $13.1 million.
The decrease in interest expense was primarily due to lower average
levels of debt outstanding, partially offset by a higher average
interest rate compared to the same period last year.
- Income tax expense as a percentage of income before income tax
was 19.5% compared to 19.1%, primarily due to tax expense
recognized for the gain on the sale of distribution and office
facilities in El Paso, Texas during the third quarter of fiscal
2023 and an increase in tax expense for other discrete items,
partially offset by shifts in the mix of income in various tax
jurisdictions.
- Net income was $75.9 million, compared to $51.8 million.
Diluted EPS was $3.19, compared to $2.15. Diluted EPS increased
primarily due to higher operating income in both the Home &
Outdoor and Beauty & Wellness segments, lower weighted average
diluted shares outstanding and a decrease in interest expense,
partially offset by an increase in the effective income tax
rate.
- Non-GAAP adjusted EBITDA (earnings before interest, taxes,
depreciation and amortization) decreased 1.9% to $97.8 million,
compared to $99.7 million. Non-GAAP adjusted EBITDA margin
decreased to 17.8% compared to 17.9%.
On an adjusted basis (non-GAAP) for the third quarters of fiscal
2024 and 2023, excluding acquisition-related expenses, EPA
compliance costs, gain from insurance recoveries, gain on sale of
distribution and office facilities, restructuring charges,
amortization of intangible assets, and non-cash share-based
compensation, as applicable:
- Adjusted operating income decreased $2.9 million, or 3.1%, to
$89.8 million, or 16.3% of net sales revenue, compared to $92.7
million, or 16.6% of net sales revenue. The 30 basis point decrease
in adjusted operating margin was primarily driven by an increase in
annual incentive compensation expense, higher marketing expense,
increased distribution expense, a charge of $1.4 million related to
the bankruptcy of Rite Aid, and a less favorable product mix within
Beauty & Wellness. These factors were partially offset by lower
inbound and outbound freight costs, lower salary and wage costs
primarily as a result of Project Pegasus role reductions, the
favorable impact of SKU rationalization efforts in Beauty &
Wellness, and a more favorable customer mix within Home &
Outdoor.
- Adjusted income increased $0.1 million, or 0.2%, to $66.4
million, compared to $66.3 million. Adjusted diluted EPS increased
1.5% to $2.79 compared to $2.75. The increase in adjusted diluted
EPS was primarily due to a decrease in the adjusted effective
income tax rate, lower weighted average diluted shares outstanding
and a decrease in interest expense, partially offset by lower
adjusted operating income.
Segment Results - Third Quarter Fiscal
2024 Compared to Third Quarter Fiscal 2023
Home & Outdoor net sales revenue increased $7.0 million, or
3.1%, to $235.9 million, compared to $228.9 million. The increase
was driven by growth from Organic business of $4.5 million, or
2.0%, primarily due to higher home category sales in the club,
online and brick and mortar channels due to strong consumer demand
and expanded distribution, as well as insulated beverageware growth
in the online channel, primarily driven by expanded distribution
and replenishment of the new travel tumbler, higher travel related
sales in the outdoor category, and higher sales in the closeout
channel. These factors were partially offset by reduced sales to
Bed, Bath & Beyond as a result of their bankruptcy, a decline
in brick and mortar sales in the insulated beverageware category,
and lower home category sales in the closeout channel.
Home & Outdoor operating income was $49.5 million, or 21.0%
of segment net sales revenue, compared to $30.8 million, or 13.5%
of segment net sales revenue. The 750 basis point increase in
segment operating margin was primarily due to an allocated portion
of a gain on the sale of distribution and office facilities in El
Paso, Texas of $16.2 million, lower inbound and outbound freight
costs, a decrease in restructuring charges of $4.5 million, lower
commodity costs, lower salary and wage costs primarily as a result
of Project Pegasus role reductions, and a more favorable customer
mix. These factors were partially offset by higher distribution
expense, increased marketing expense, an increase in inventory
obsolescence expense, higher share-based compensation expense,
increased annual incentive compensation expense, and an increase in
depreciation expense primarily due to a new distribution facility.
Adjusted operating income decreased 0.2% to $39.8 million, or 16.9%
of segment net sales revenue, compared to $39.9 million, or 17.4%
of segment net sales revenue.
Beauty & Wellness net sales revenue decreased $16.0 million,
or 4.9%, to $313.7 million, compared to $329.7 million. The decline
was driven by a decrease from Organic business of $18.1 million, or
5.5%, primarily due to a decline in sales of hair appliances, a
decline in humidification reflecting a slow start to the
cough/cold/flu season as compared to the prior year period, and
lower sales of air filtration products and fans, primarily driven
by softer consumer demand and SKU rationalization efforts. The
decline was partially offset by growth in thermometry which drove
higher international sales, an increase in sales of heaters and
water filtration products, and an increase in sales of prestige
hair care products.
Beauty & Wellness operating income was $57.4 million, or
18.3% of segment net sales revenue, compared to $46.3 million, or
14.1% of segment net sales revenue. The 420 basis point increase in
segment operating margin was primarily due to an allocated portion
of a gain on the sale of distribution and office facilities in El
Paso, Texas of $18.0 million, lower inbound and outbound freight
costs, reduced inventory obsolescence expense, the favorable
comparative impact of EPA compliance costs of $2.1 million in the
prior year period, a decrease in restructuring charges of $2.1
million, the favorable impact of SKU rationalization efforts,
decreased distribution expense, reduced share-based compensation
expense, and lower salary and wage costs primarily as a result of
Project Pegasus role reductions. These factors were partially
offset by the unfavorable comparative impact of a gain from
insurance recoveries of $9.7 million recognized in the prior year
period, an increase in annual incentive compensation expense,
higher marketing expense, the unfavorable comparative impact of
duty refunds received in the prior year period, a charge of $1.4
million related to the bankruptcy of Rite Aid, unfavorable
operating leverage, and a less favorable product mix. Adjusted
operating income decreased 5.2% to $50.1 million, or 16.0% of
segment net sales revenue, compared to $52.8 million, or 16.0% of
segment net sales revenue.
Balance Sheet and Cash Flow - Third
Quarter Fiscal 2024 Compared to Third Quarter Fiscal
2023
- Cash and cash equivalents totaled $25.2 million, compared to
$45.3 million.
- Accounts receivable turnover was 68.6 days, compared to 70.6
days.
- Inventory was $426.0 million, compared to $536.8 million.
- Total short- and long-term debt was $735.6 million, compared to
$1,080.5 million as a result of strong cash flow in the fourth
quarter of fiscal 2023 and the first three quarters of fiscal
2024.
- Net cash provided by operating activities for the first nine
months of the fiscal year was $232.5 million, compared to $49.5
million for the same period last year.
- Free cash flow(1)(2) for the first nine months of the fiscal
year was $202.8 million, compared to free cash flow of $(96.7)
million for the same period last year, which includes $16.8 million
and $125.8 million of capital expenditures for the 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 reduce costs (collectively referred to as
“Project Pegasus”). Project Pegasus includes multiple workstreams
to further optimize the Company's brand portfolio, streamline and
simplify the organization, accelerate cost of goods savings
projects, enhance the efficiency of its supply chain network,
optimize its indirect spending, and improve its cash flow and
working capital, as well as other activities. The Company
anticipates these initiatives will create operating efficiencies,
as well as provide a platform to fund future growth
investments.
During the fourth quarter of fiscal 2023, the Company made
changes to the structure of the organization as part of its global
restructuring plan, Project Pegasus. As a result of these changes,
the disclosures included herein reflect two reportable segments,
Home & Outdoor and Beauty & Wellness. The previous Health
& Wellness and Beauty operating segments have been combined
into a single reportable segment, which is referred to herein as
“Beauty & Wellness.” Comparative prior period segment
information has been recast to conform to this change in reportable
segments.
During the second quarter of fiscal 2024, the Company announced
plans to geographically consolidate the U.S. Beauty business,
currently located in El Paso, Texas, and Irvine, California, and
co-locate it with its Wellness business in the Boston,
Massachusetts area. This geographical consolidation and relocation
is the next step in the Company's initiative to streamline and
simplify the organization and it is expected to be completed during
fiscal 2025. The Company expects these changes will enable a
greater opportunity to capture synergies and enhance collaboration
and innovation within the Beauty & Wellness segment.
As previously disclosed, the Company continues to have the
following expectations regarding Project Pegasus charges:
- Total one-time pre-tax restructuring charges of approximately
$60 million to $65 million over the duration of the plan, expected
to be completed during fiscal 2025.
- Pre-tax restructuring charges to be comprised of approximately
$22 million to $25 million of severance and employee related costs,
$30 million of professional fees, $5 million of contract
termination costs, and $3 million to $5 million of other exit and
disposal costs.
- All of the Company's operating segments and shared services
will be impacted by the plan and pre-tax restructuring charges
include approximately $17 million to $19 million in Home &
Outdoor and $43 million to $46 million in Beauty &
Wellness.
- Pre-tax restructuring charges represent primarily cash
expenditures, which are expected to be substantially paid by the
end of fiscal 2025.
The Company also continues to have the following expectations
regarding Project Pegasus savings:
- Targeted annualized pre-tax operating profit improvements of
approximately $75 million to $85 million, which began in fiscal
2024 and are expected to be substantially achieved by the end of
fiscal 2026.
- Estimated cadence of the recognition of the savings will be
approximately 25% in fiscal 2024, approximately 50% in fiscal 2025
and approximately 25% in fiscal 2026.
- Total profit improvements to be realized approximately 60%
through reduced cost of goods sold and 40% through lower
SG&A.
Fiscal 2024 Annual
Outlook
The Company now expects consolidated net sales revenue in the
range of $1.975 billion to $2.0 billion, which implies a decline of
4.7% to 3.5%, compared to the previous range of $1.965 billion to
$2.015 billion. This continues to include a combined year-over-year
decline of approximately $70 million, or 3.4%, from the bankruptcy
of Bed, Bath & Beyond and the Pegasus SKU rationalization
initiative. The Company's sales outlook reflects year-to-date
performance, as well as the Company’s view of continued pressure
and uncertainty on consumer spending, especially for some
discretionary categories, lower illness incidence than pre-COVID
historical averages, and softer-than-expected holiday sales. In the
aggregate, the Company believes retail inventory on hand is at
healthy levels, and it continues to expect that sell-in will more
closely match sell-through during the remainder of fiscal 2024.
The Company’s fiscal year net sales outlook now reflects the
following expectations by segment:
- Home & Outdoor net sales decline of 1.5% to 0.5%, compared
to the prior expectation of a decline of 1.7% to growth of 1.0%;
and
- Beauty & Wellness net sales decline of 7.5% to 5.9%,
compared to the prior expectation of a decline of 8.0% to
5.8%.
The Company now expects GAAP diluted EPS of $6.67 to $7.05,
compared to the previous range of $6.36 to $7.03, and non-GAAP
adjusted diluted EPS in the range of $8.60 to $8.85, which implies
an adjusted EPS decline of 9.0% to 6.3%, compared to the previous
range of $8.50 to $9.00.
The Company now expects consolidated adjusted EBITDA of $330
million to $335 million, compared to the previous range of $338
million to $348 million, which implies growth of 0.8% to 2.3%. The
Company continues to expect free cash flow in the range of $250
million to $270 million and its net leverage ratio(1)(3), as
defined in its credit agreement, to end fiscal 2024 at 2.0x to
1.85x.
The Company’s consolidated net sales and EPS outlook also
reflects the following assumptions:
- the severity of the cough/cold/flu season will be below
pre-COVID historical averages, as compared to the previous
assumption that it would be in line with pre-COVID historical
averages;
- December 2023 foreign currency exchange rates will remain
constant for the remainder of the fiscal year;
- expected interest expense in the range of $52 million to $54
million;
- a reported GAAP effective tax rate range of 20.0% to 19.0% for
the full fiscal year 2024 and an adjusted effective tax rate range
of 14.5% to 13.5%; and
- an estimated weighted average diluted shares outstanding of
24.0 million for the full year.
The likelihood, timing and potential impact of a significant or
prolonged recession, any fiscal 2024 acquisitions and divestitures,
future asset impairment charges, future foreign currency
fluctuations, additional interest rate increases, or share
repurchases are unknown and cannot be reasonably estimated;
therefore, they are not included in the Company’s outlook.
Conference Call and
Webcast
The Company will conduct a teleconference in conjunction with
today’s earnings release. The teleconference begins at 9:00 a.m.
Eastern Time today, Monday, January 8, 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 12:00 p.m. Eastern Time on January 8, 2024,
until 11:59 p.m. Eastern Time on January 22, 2024, and can be
accessed by dialing (844) 512-2921 and entering replay pin number
13742678. A replay of the webcast will remain available on the
website for one year.
Non-GAAP Financial
Measures
The Company reports and discusses its operating results using
financial measures consistent with accounting principles generally
accepted in the United States of America (“GAAP”). To supplement
its presentation, the Company discloses certain financial measures
that may be considered non-GAAP such as Adjusted Operating Income,
Adjusted Operating Margin, Adjusted Effective Tax Rate, Adjusted
Income, Adjusted Diluted Earnings per Share (“EPS”), EBITDA,
Adjusted EBITDA, Adjusted EBITDA Margin, Free Cash Flow and Net
Leverage Ratio, which are presented in accompanying tables to this
press release along with a reconciliation of these financial
measures to their corresponding GAAP-based financial measures
presented in the Company’s condensed consolidated statements of
income and cash flows. For additional information see Note 1 to the
accompanying tables to this press release.
About Helen of Troy
Limited
Helen of Troy Limited (NASDAQ: HELE) is a leading global
consumer products company offering creative products and solutions
for its customers through a diversified portfolio of
well-recognized and widely-trusted brands, including OXO, Hydro
Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools and Drybar.
The Company sometimes refers to these brands as its Leadership
Brands. All trademarks herein belong to Helen of Troy Limited (or
its subsidiaries) and/or are used under license from their
respective licensors.
For more information about Helen of Troy, please visit
http://investor.helenoftroy.com
Forward-Looking Statements
Certain written and oral statements made by the Company and
subsidiaries of the Company may constitute “forward-looking
statements” as defined under the Private Securities Litigation
Reform Act of 1995. This includes statements made in this press
release, in other filings with the SEC, and in certain other oral
and written presentations. Generally, the words “anticipates”,
“believes”, “expects”, “plans”, “may”, “will”, “might”, “would”,
“should”, “seeks”, “estimates”, “project”, “predict”, “potential”,
“currently”, “continue”, “intends”, “outlook”, “forecasts”,
“targets”, “could”, and other similar words identify
forward-looking statements. All statements that address operating
results, events or developments that the Company expects or
anticipates may occur in the future, including statements related
to sales, expenses, EPS results, and statements expressing general
expectations about future operating results, are forward-looking
statements and are based upon its current expectations and various
assumptions. The Company believes there is a reasonable basis for
these expectations and assumptions, but there can be no assurance
that the Company will realize these expectations or that these
assumptions will prove correct. Forward-looking statements are only
as of the date they are made and are subject to risks that could
cause them to differ materially from actual results. Accordingly,
the Company cautions readers not to place undue reliance on
forward-looking statements. The forward-looking statements
contained in this press release should be read in conjunction with,
and are subject to and qualified by, the risks described in the
Company’s Form 10-K for the year ended February 28, 2023, and in
the Company's other filings with the SEC. Investors are urged to
refer to the risk factors referred to above for a description of
these risks. Such risks include, among others, the occurrence of
cyber incidents or failure by the Company or its third-party
service providers to maintain cybersecurity and the integrity of
confidential internal or customer data, a cybersecurity breach,
obsolescence or interruptions in the operation of the Company’s
central global Enterprise Resource Planning systems and other
peripheral information systems, the geographic concentration of
certain United States (“U.S.”) distribution facilities which
increases its risk to disruptions that could affect the Company’s
ability to deliver products in a timely manner, the Company’s
ability to develop and introduce a continuing stream of innovative
new products to meet changing consumer preferences, actions taken
by large customers that may adversely affect the Company’s gross
profit and operating results, the Company’s dependence on sales to
several large customers and the risks associated with any loss of,
or substantial decline in, sales to top customers, the Company’s
dependence on third-party manufacturers, most of which are located
in Asia, and any inability to obtain products from such
manufacturers, the Company's ability to deliver products to its
customers in a timely manner and according to their fulfillment
standards, the risks associated with trade barriers, exchange
controls, expropriations, and other risks associated with domestic
and foreign operations including uncertainty and business
interruptions resulting from political changes and 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 the use of licensed trademarks from or to third
parties, risks associated with weather conditions, the duration and
severity of the cold and flu season and other related factors, the
Company’s reliance on its Chief Executive Officer and a limited
number of other key senior officers to operate its business, the
Company's ability to execute and realize expected synergies from
strategic business initiatives such as acquisitions, divestitures
and global restructuring plans, including Project Pegasus, the
risks of potential changes in laws and regulations, including
environmental, employment and health and safety and tax laws, and
the costs and complexities of compliance with such laws, the risks
associated with increased focus and expectations on climate change
and other environmental, social and governance matters, the risks
associated with significant changes in or the Company's compliance
with regulations, interpretations or product certification
requirements, the risks associated with global legal developments
regarding privacy and data security that could result in changes to
its business practices, penalties, increased cost of operations, or
otherwise harm the business, the Company’s dependence on whether it
is classified as a “controlled foreign corporation” for U.S.
federal income tax purposes which impacts the tax treatment of its
non-U.S. income, the risks associated with legislation enacted in
Bermuda and Barbados in response to the European Union’s review of
harmful tax competition, the risks associated with accounting for
tax positions and the resolution of tax disputes, the risks of
significant tariffs or other restrictions being placed on imports
from China, Mexico or Vietnam or any retaliatory trade measures
taken by China, Mexico or Vietnam, the risks associated with
product recalls, product liability and other claims against the
Company, and associated financial risks including but not limited
to, significant impairment of the Company's goodwill,
indefinite-lived and definite-lived intangible assets or other
long-lived assets, increased costs of raw materials, energy and
transportation, the risks to the Company's liquidity or cost of
capital which may be materially adversely affected by constraints
or changes in the capital and credit markets, interest rates and
limitations under its financing arrangements, risks associated with
foreign currency exchange rate fluctuations, and projections of
product demand, sales and net income, which are highly subjective
in nature, and from which future sales and net income could vary in
a material amount. The Company undertakes no obligation to publicly
update or revise any forward-looking statements as a result of new
information, future events or otherwise.
HELEN OF
TROY LIMITED AND SUBSIDIARIES
Condensed Consolidated
Statements of Income (5)
(Unaudited) (in thousands,
except per share data)
Three Months Ended November
30,
2023
2022
Sales revenue, net
$
549,614
100.0
%
$
558,606
100.0
%
Cost of goods sold
285,833
52.0
%
301,930
54.1
%
Gross profit
263,781
48.0
%
256,676
45.9
%
Selling, general and administrative
expense (“SG&A”)
152,964
27.8
%
169,020
30.3
%
Restructuring charges
3,890
0.7
%
10,463
1.9
%
Operating income
106,927
19.5
%
77,193
13.8
%
Non-operating income, net
180
—
%
5
—
%
Interest expense
12,859
2.3
%
13,149
2.4
%
Income before income tax
94,248
17.1
%
64,049
11.5
%
Income tax expense
18,350
3.3
%
12,223
2.2
%
Net income
$
75,898
13.8
%
$
51,826
9.3
%
Diluted earnings per share (“EPS”)
$
3.19
$
2.15
Weighted average shares of common stock
used in computing diluted EPS
23,813
24,078
Nine Months Ended November
30,
2023
2022
Sales revenue, net
$
1,515,849
100.0
%
$
1,588,084
100.0
%
Cost of goods sold
806,784
53.2
%
898,791
56.6
%
Gross profit
709,065
46.8
%
689,293
43.4
%
SG&A
499,790
33.0
%
515,974
32.5
%
Restructuring charges
14,862
1.0
%
15,241
1.0
%
Operating income
194,413
12.8
%
158,078
10.0
%
Non-operating income, net
465
—
%
185
—
%
Interest expense
40,565
2.7
%
26,688
1.7
%
Income before income tax
154,313
10.2
%
131,575
8.3
%
Income tax expense
28,453
1.9
%
24,482
1.5
%
Net income
$
125,860
8.3
%
$
107,093
6.7
%
Diluted EPS
$
5.25
$
4.45
Weighted average shares of common stock
used in computing diluted EPS
23,996
24,086
Consolidated and Segment Net
Sales Revenue
(Unaudited) (in
thousands)
Three Months Ended November
30,
Home &
Outdoor
Beauty & Wellness
Total
Fiscal 2023 sales revenue, net
$
228,937
$
329,669
$
558,606
Organic business (4)
4,518
(18,076
)
(13,558
)
Impact of foreign currency
2,493
2,073
4,566
Change in sales revenue, net
7,011
(16,003
)
(8,992
)
Fiscal 2024 sales revenue, net
$
235,948
$
313,666
$
549,614
Total net sales revenue growth
(decline)
3.1
%
(4.9
)%
(1.6
)%
Organic business
2.0
%
(5.5
)%
(2.4
)%
Impact of foreign currency
1.1
%
0.6
%
0.8
%
Nine Months Ended November
30,
Home &
Outdoor
Beauty & Wellness
Total
Fiscal 2023 sales revenue, net
$
703,759
$
884,325
$
1,588,084
Organic business (4)
(13,317
)
(70,448
)
(83,765
)
Impact of foreign currency
2,627
2,801
5,428
Acquisition (5)
—
6,102
6,102
Change in sales revenue, net
(10,690
)
(61,545
)
(72,235
)
Fiscal 2024 sales revenue, net
$
693,069
$
822,780
$
1,515,849
Total net sales revenue growth
(decline)
(1.5
)%
(7.0
)%
(4.5
)%
Organic business
(1.9
)%
(8.0
)%
(5.3
)%
Impact of foreign currency
0.4
%
0.3
%
0.3
%
Acquisition
—
%
0.7
%
0.4
%
Consolidated Net Sales by
Geographic Region (6)
(Unaudited) (in
thousands)
Three Months Ended November
30,
2023
2022
Domestic sales revenue, net
$
428,582
78.0
%
$
437,894
78.4
%
International sales revenue, net
121,032
22.0
%
120,712
21.6
%
Total sales revenue, net
$
549,614
100.0
%
$
558,606
100.0
%
Nine Months Ended November
30,
2023
2022
Domestic sales revenue, net
$
1,176,190
77.6
%
$
1,254,545
79.0
%
International sales revenue, net
339,659
22.4
%
333,539
21.0
%
Total sales revenue, net
$
1,515,849
100.0
%
$
1,588,084
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 November
30, 2023
Home &
Outdoor
Beauty &
Wellness (5)
Total
Operating income, as reported (GAAP)
$
49,514
21.0
%
$
57,413
18.3
%
$
106,927
19.5
%
Gain on sale of distribution and office
facilities (7)
(16,175
)
(6.9
)%
(18,015
)
(5.7
)%
(34,190
)
(6.2
)%
Restructuring charges
583
0.2
%
3,307
1.1
%
3,890
0.7
%
Subtotal
33,922
14.4
%
42,705
13.6
%
76,627
13.9
%
Amortization of intangible assets
1,781
0.8
%
2,827
0.9
%
4,608
0.8
%
Non-cash share-based compensation
4,061
1.7
%
4,518
1.4
%
8,579
1.6
%
Adjusted operating income (non-GAAP)
$
39,764
16.9
%
$
50,050
16.0
%
$
89,814
16.3
%
Three Months Ended November
30, 2022
Home &
Outdoor
Beauty &
Wellness (5)
Total
Operating income, as reported (GAAP)
$
30,847
13.5
%
$
46,346
14.1
%
$
77,193
13.8
%
Acquisition-related expenses
(2
)
—
%
2
—
%
—
—
%
EPA compliance costs (8)
—
—
%
2,103
0.6
%
2,103
0.4
%
Gain from insurance recoveries (9)
—
—
%
(9,676
)
(2.9
)%
(9,676
)
(1.7
)%
Restructuring charges
5,090
2.2
%
5,373
1.6
%
10,463
1.9
%
Subtotal
35,935
15.7
%
44,148
13.4
%
80,083
14.3
%
Amortization of intangible assets
1,756
0.8
%
2,896
0.9
%
4,652
0.8
%
Non-cash share-based compensation
2,169
0.9
%
5,772
1.8
%
7,941
1.4
%
Adjusted operating income (non-GAAP)
$
39,860
17.4
%
$
52,816
16.0
%
$
92,676
16.6
%
Nine Months Ended November 30,
2023
Home &
Outdoor
Beauty &
Wellness (5)
Total
Operating income, as reported (GAAP)
$
107,729
15.5
%
$
86,684
10.5
%
$
194,413
12.8
%
Bed, Bath & Beyond bankruptcy (10)
3,087
0.4
%
1,126
0.1
%
4,213
0.3
%
Gain on sale of distribution and office
facilities
(16,175
)
(2.3
)%
(18,015
)
(2.2
)%
(34,190
)
(2.3
)%
Restructuring charges
4,644
0.7
%
10,218
1.2
%
14,862
1.0
%
Subtotal
99,285
14.3
%
80,013
9.7
%
179,298
11.8
%
Amortization of intangible assets
5,322
0.8
%
8,537
1.0
%
13,859
0.9
%
Non-cash share-based compensation
11,846
1.7
%
13,259
1.6
%
25,105
1.7
%
Adjusted operating income (non-GAAP)
$
116,453
16.8
%
$
101,809
12.4
%
$
218,262
14.4
%
Nine Months Ended November 30,
2022
Home &
Outdoor
Beauty &
Wellness (5)
Total
Operating income, as reported (GAAP)
$
102,722
14.6
%
$
55,356
6.3
%
$
158,078
10.0
%
Acquisition-related expenses
117
—
%
2,667
0.3
%
2,784
0.2
%
EPA compliance costs
—
—
%
22,101
2.5
%
22,101
1.4
%
Gain from insurance recoveries
—
—
%
(9,676
)
(1.1
)%
(9,676
)
(0.6
)%
Restructuring charges
5,562
0.8
%
9,679
1.1
%
15,241
1.0
%
Subtotal
108,401
15.4
%
80,127
9.1
%
188,528
11.9
%
Amortization of intangible assets
5,255
0.7
%
8,407
1.0
%
13,662
0.9
%
Non-cash share-based compensation
10,807
1.5
%
21,248
2.4
%
32,055
2.0
%
Adjusted operating income (non-GAAP)
$
124,463
17.7
%
$
109,782
12.4
%
$
234,245
14.8
%
Reconciliation of Non-GAAP
Financial Measures – GAAP Net Income to EBITDA
(Earnings Before Interest,
Taxes, Depreciation and Amortization), Adjusted EBITDA and Adjusted
EBITDA Margin (Non-GAAP) (1)
(Unaudited) (in
thousands)
Three Months Ended November
30,
2023
2022
Net income, as reported (GAAP)
$
75,898
13.8
%
$
51,826
9.3
%
Interest expense
12,859
2.3
%
13,149
2.4
%
Income tax expense
18,350
3.3
%
12,223
2.2
%
Depreciation and amortization
12,431
2.3
%
11,713
2.1
%
EBITDA (non-GAAP)
119,538
21.7
%
88,911
15.9
%
Add: EPA compliance costs
—
—
%
2,103
0.4
%
Gain from insurance recoveries
—
—
%
(9,676
)
(1.7
)%
Gain on sale of distribution and office
facilities
(34,190
)
(6.2
)%
—
—
%
Restructuring charges
3,890
0.7
%
10,463
1.9
%
Non-cash share-based compensation
8,579
1.6
%
7,941
1.4
%
Adjusted EBITDA (non-GAAP)
$
97,817
17.8
%
$
99,742
17.9
%
Nine Months Ended November
30,
2023
2022
Net income, as reported (GAAP)
$
125,860
8.3
%
$
107,093
6.7
%
Interest expense
40,565
2.7
%
26,688
1.7
%
Income tax expense
28,453
1.9
%
24,482
1.5
%
Depreciation and amortization
37,037
2.4
%
33,330
2.1
%
EBITDA (non-GAAP)
231,915
15.3
%
191,593
12.1
%
Add: Acquisition-related expenses
—
—
%
2,784
0.2
%
Bed, Bath & Beyond bankruptcy
4,213
0.3
%
—
—
%
EPA compliance costs
—
—
%
22,101
1.4
%
Gain from insurance recoveries
—
—
%
(9,676
)
(0.6
)%
Gain on sale of distribution and office
facilities
(34,190
)
(2.3
)%
—
—
%
Restructuring charges
14,862
1.0
%
15,241
1.0
%
Non-cash share-based compensation
25,105
1.7
%
32,055
2.0
%
Adjusted EBITDA (non-GAAP)
$
241,905
16.0
%
$
254,098
16.0
%
Quarterly Period Ended
Twelve Months Ended
November 30, 2023
February
May
August
November
Net income, as reported (GAAP)
$
36,180
$
22,581
$
27,381
$
75,898
$
162,040
Interest expense
14,063
14,052
13,654
12,859
54,628
Income tax expense
3,534
4,145
5,958
18,350
31,987
Depreciation and amortization
11,353
10,715
13,891
12,431
48,390
EBITDA (non-GAAP)
65,130
51,493
60,884
119,538
297,045
Add: Bed, Bath & Beyond bankruptcy
—
4,213
—
—
4,213
EPA compliance costs
1,472
—
—
—
1,472
Gain on sale of distribution and office
facilities
—
—
—
(34,190
)
(34,190
)
Restructuring charges
12,121
7,355
3,617
3,890
26,983
Non-cash share-based compensation
(5,302
)
9,297
7,229
8,579
19,803
Adjusted EBITDA (non-GAAP)
$
73,421
$
72,358
$
71,730
$
97,817
$
315,326
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 November
30, 2023
Home &
Outdoor
Beauty &
Wellness (5)
Total
Operating income, as reported (GAAP)
$
49,514
21.0
%
$
57,413
18.3
%
$
106,927
19.5
%
Depreciation and amortization
6,025
2.6
%
6,406
2.0
%
12,431
2.3
%
Non-operating income, net
—
—
%
180
0.1
%
180
—
%
EBITDA (non-GAAP)
55,539
23.5
%
63,999
20.4
%
119,538
21.7
%
Add: Gain on sale of distribution and
office facilities
(16,175
)
(6.9
)%
(18,015
)
(5.7
)%
(34,190
)
(6.2
)%
Restructuring charges
583
0.2
%
3,307
1.1
%
3,890
0.7
%
Non-cash share-based compensation
4,061
1.7
%
4,518
1.4
%
8,579
1.6
%
Adjusted EBITDA (non-GAAP)
$
44,008
18.7
%
$
53,809
17.2
%
$
97,817
17.8
%
Three Months Ended November
30, 2022
Home &
Outdoor
Beauty &
Wellness (5)
Total
Operating income, as reported (GAAP)
$
30,847
13.5
%
$
46,346
14.1
%
$
77,193
13.8
%
Depreciation and amortization
4,716
2.1
%
6,997
2.1
%
11,713
2.1
%
Non-operating income, net
—
—
%
5
—
%
5
—
%
EBITDA (non-GAAP)
35,563
15.5
%
53,348
16.2
%
88,911
15.9
%
Add: Acquisition-related expenses
(2
)
—
%
2
—
%
—
—
%
EPA compliance costs
—
—
%
2,103
0.6
%
2,103
0.4
%
Gain from insurance recoveries
—
—
%
(9,676
)
(2.9
)%
(9,676
)
(1.7
)%
Restructuring charges
5,090
2.2
%
5,373
1.6
%
10,463
1.9
%
Non-cash share-based compensation
2,169
0.9
%
5,772
1.8
%
7,941
1.4
%
Adjusted EBITDA (non-GAAP)
$
42,820
18.7
%
$
56,922
17.3
%
$
99,742
17.9
%
Nine Months Ended November 30,
2023
Home &
Outdoor
Beauty &
Wellness (5)
Total
Operating income, as reported (GAAP)
$
107,729
15.5
%
$
86,684
10.5
%
$
194,413
12.8
%
Depreciation and amortization
17,033
2.5
%
20,004
2.4
%
37,037
2.4
%
Non-operating income, net
—
—
%
465
0.1
%
465
—
%
EBITDA (non-GAAP)
124,762
18.0
%
107,153
13.0
%
231,915
15.3
%
Add: Bed, Bath & Beyond bankruptcy
3,087
0.4
%
1,126
0.1
%
4,213
0.3
%
Gain on sale of distribution and office
facilities
(16,175
)
(2.3
)%
(18,015
)
(2.2
)%
(34,190
)
(2.3
)%
Restructuring charges
4,644
0.7
%
10,218
1.2
%
14,862
1.0
%
Non-cash share-based compensation
11,846
1.7
%
13,259
1.6
%
25,105
1.7
%
Adjusted EBITDA (non-GAAP)
$
128,164
18.5
%
$
113,741
13.8
%
$
241,905
16.0
%
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)
Nine Months Ended November 30,
2022
Home &
Outdoor
Beauty &
Wellness (5)
Total
Operating income, as reported (GAAP)
$
102,722
14.6
%
$
55,356
6.3
%
$
158,078
10.0
%
Depreciation and amortization
13,704
1.9
%
19,626
2.2
%
33,330
2.1
%
Non-operating income, net
—
—
%
185
—
%
185
—
%
EBITDA (non-GAAP)
116,426
16.5
%
75,167
8.5
%
191,593
12.1
%
Add: Acquisition-related expenses
117
—
%
2,667
0.3
%
2,784
0.2
%
EPA compliance costs
—
—
%
22,101
2.5
%
22,101
1.4
%
Gain from insurance recoveries
—
—
%
(9,676
)
(1.1
)%
(9,676
)
(0.6
)%
Restructuring charges
5,562
0.8
%
9,679
1.1
%
15,241
1.0
%
Non-cash share-based compensation
10,807
1.5
%
21,248
2.4
%
32,055
2.0
%
Adjusted EBITDA (non-GAAP)
$
132,912
18.9
%
$
121,186
13.7
%
$
254,098
16.0
%
Reconciliation of Non-GAAP
Financial Measures – GAAP Income and Diluted EPS to
Adjusted Income and Adjusted
Diluted EPS (Non-GAAP) (1)
(Unaudited) (in thousands,
except per share data)
Three Months Ended November
30, 2023
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
94,248
$
18,350
$
75,898
$
3.96
$
0.77
$
3.19
Gain on sale of distribution and office
facilities
(34,190
)
(8,787
)
(25,403
)
(1.44
)
(0.37
)
(1.07
)
Restructuring charges
3,890
49
3,841
0.16
—
0.16
Subtotal
63,948
9,612
54,336
2.69
0.40
2.28
Amortization of intangible assets
4,608
606
4,002
0.19
0.03
0.17
Non-cash share-based compensation
8,579
532
8,047
0.36
0.02
0.34
Adjusted (non-GAAP)
$
77,135
$
10,750
$
66,385
$
3.24
$
0.45
$
2.79
Weighted average shares of common stock
used in computing diluted EPS
23,813
Three Months Ended November
30, 2022
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
64,049
$
12,223
$
51,826
$
2.66
$
0.51
$
2.15
Acquisition-related expenses
—
—
—
—
—
—
EPA compliance costs
2,103
32
2,071
0.09
—
0.09
Gain from insurance recoveries
(9,676
)
(121
)
(9,555
)
(0.40
)
(0.01
)
(0.40
)
Restructuring charges
10,463
131
10,332
0.43
0.01
0.43
Subtotal
66,939
12,265
54,674
2.78
0.51
2.27
Amortization of intangible assets
4,652
534
4,118
0.19
0.02
0.17
Non-cash share-based compensation
7,941
474
7,467
0.33
0.02
0.31
Adjusted (non-GAAP)
$
79,532
$
13,273
$
66,259
$
3.30
$
0.55
$
2.75
Weighted average shares of common stock
used in computing diluted EPS
24,078
Nine Months Ended November 30,
2023
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
154,313
$
28,453
$
125,860
$
6.43
$
1.19
$
5.25
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
)
(1.42
)
(0.37
)
(1.06
)
Restructuring charges
14,862
185
14,677
0.62
0.01
0.61
Subtotal
139,198
19,904
119,294
5.80
0.83
4.97
Amortization of intangible assets
13,859
1,819
12,040
0.58
0.08
0.50
Non-cash share-based compensation
25,105
1,558
23,547
1.05
0.06
0.98
Adjusted (non-GAAP)
$
178,162
$
23,281
$
154,881
$
7.42
$
0.97
$
6.45
Weighted average shares of common stock
used in computing diluted EPS
23,996
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)
Nine Months Ended November 30,
2022
Income
Diluted EPS
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
131,575
$
24,482
$
107,093
$
5.46
$
1.02
$
4.45
Acquisition-related expenses
2,784
2
2,782
0.12
—
0.12
EPA compliance costs
22,101
332
21,769
0.92
0.01
0.90
Gain from insurance recoveries
(9,676
)
(121
)
(9,555
)
(0.40
)
(0.01
)
(0.40
)
Restructuring charges
15,241
192
15,049
0.63
0.01
0.62
Subtotal
162,025
24,887
137,138
6.73
1.03
5.69
Amortization of intangible assets
13,662
1,581
12,081
0.57
0.07
0.50
Non-cash share-based compensation
32,055
2,128
29,927
1.33
0.09
1.24
Adjusted (non-GAAP)
$
207,742
$
28,596
$
179,146
$
8.63
$
1.19
$
7.44
Weighted average shares of common stock
used in computing diluted EPS
24,086
Selected Consolidated Balance
Sheet, Liquidity and Cash Flow Information
(Unaudited) (in
thousands)
November 30,
2023
2022
Balance Sheet:
Cash and cash equivalents
$
25,247
$
45,337
Receivables, net
463,323
505,555
Inventory
426,026
536,793
Total assets, current
956,438
1,122,401
Total assets
2,952,286
3,129,425
Total liabilities, current
543,716
522,702
Total long-term liabilities
822,292
1,149,650
Total debt
735,648
1,080,460
Stockholders' equity
1,586,278
1,457,073
Nine Months Ended November
30,
2023
2022
Accounts receivable turnover (days)
(11)
68.6
70.6
Inventory turnover (times) (11)
2.4
2.1
Working capital
$
412,722
$
599,699
Current ratio
1.8:1
2.1:1
Ending debt to ending equity ratio
46.4
%
74.2
%
Return on average equity (11)
10.7
%
10.7
%
Nine Months Ended November
30,
2023
2022
Cash Flow:
Depreciation and amortization
$
37,037
$
33,330
Net cash provided by operating
activities
232,459
49,523
Capital and intangible asset
expenditures
29,681
146,194
Net debt (repayments) proceeds
(199,687
)
266,452
Payments for repurchases of common
stock
54,841
18,350
Reconciliation of Non-GAAP
Financial Measures – GAAP Net Cash Provided by Operating Activities
to Free Cash Flow (Non-GAAP) (1) (2)
(Unaudited) (in
thousands)
Nine Months Ended November
30,
2023
2022
Net cash provided by operating activities
(GAAP)
$
232,459
$
49,523
Less: Capital and intangible asset
expenditures
(29,681
)
(146,194
)
Free cash flow (non-GAAP)
$
202,778
$
(96,671
)
Reconciliation of Non-GAAP
Financial Measures – Net Leverage Ratio (Non-GAAP) (1) (3)
(Unaudited) (in
thousands)
Quarterly Period Ended
Twelve Months Ended November
30, 2023
February
May
August
November
Adjusted EBITDA (non-GAAP) (12)
$
73,421
$
72,358
$
71,730
$
97,817
$
315,326
Bed, Bath & Beyond bankruptcy (10)
—
(4,213
)
—
—
(4,213
)
Adjusted EBITDA per the credit
agreement
$
73,421
$
68,145
$
71,730
$
97,817
$
311,113
Total borrowings under the credit
agreement, as reported (GAAP)
$
737,188
Add: Outstanding letters of credit
15,485
Less: Unrestricted cash and cash
equivalents
(25,247
)
Net debt
$
727,426
Net leverage ratio (non-GAAP) (3)
2.34
Fiscal 2024 Outlook for Net
Sales Revenue
(Unaudited) (in
thousands)
Fiscal 2023
Outlook Fiscal 2024
Net sales revenue
$
2,072,667
$
1,975,000
—
$
2,000,000
Net sales revenue decline
(4.7
)%
—
(3.5
)%
Reconciliation of Non-GAAP
Financial Measures – Fiscal 2024 Outlook for GAAP Operating Income
to EBITDA (Earnings Before Interest, Taxes, Depreciation and
Amortization)
and Adjusted EBITDA (Non-GAAP)
(1) (Unaudited) (in thousands)
Nine Months Ended November 30,
2023
Outlook for the
Balance of the
Fiscal Year
(Three Months)
Outlook Fiscal 2024
Operating income, as reported (GAAP)
$
194,413
$
54,662
—
$
67,633
$
249,075
—
$
262,046
Depreciation and amortization
37,037
18,901
—
13,901
55,938
—
50,938
Non-operating income, net
465
760
—
510
1,225
—
975
EBITDA (non-GAAP)
231,915
74,323
—
82,044
306,238
—
313,959
Add: Bed, Bath & Beyond bankruptcy
4,213
—
—
—
4,213
—
4,213
Gain on sale of distribution and office
facilities
(34,190
)
—
—
—
(34,190
)
—
(34,190
)
Restructuring charges
14,862
5,000
—
3,000
19,862
—
17,862
Non-cash share-based compensation
25,105
8,772
—
8,051
33,877
—
33,156
Adjusted EBITDA (non-GAAP)
$
241,905
$
88,095
—
$
93,095
$
330,000
—
$
335,000
Reconciliation of Non-GAAP
Financial Measures - Fiscal 2024 Outlook for GAAP Diluted EPS to
Adjusted Diluted EPS (Non-GAAP) and GAAP Effective Tax Rate to
Adjusted Effective Tax Rate (Non-GAAP) (1) (Unaudited)
Nine Months Ended November 30,
2023
Outlook for the
Balance of the
Fiscal Year
(Three Months)
Outlook
Fiscal 2024
Tax Rate Outlook Fiscal
2024
Diluted EPS, as reported (GAAP)
$
5.25
$
1.42
-
$
1.80
$
6.67
-
$
7.05
20.0
%
-
19.0
%
Bed, Bath & Beyond bankruptcy
0.18
—
-
—
0.18
-
0.18
Gain on sale of distribution and office
facilities
(1.42
)
—
-
—
(1.42
)
-
(1.42
)
Restructuring charges
0.62
0.21
-
0.13
0.83
-
0.75
Amortization of intangible assets
0.58
0.20
-
0.17
0.78
-
0.75
Non-cash share-based compensation
1.05
0.36
-
0.33
1.41
-
1.38
Income tax effect of adjustments
0.22
(0.07
)
-
(0.06
)
0.15
-
0.16
(5.5
)%
-
(5.5
)%
Adjusted diluted EPS (non-GAAP)
$
6.45
$
2.15
-
$
2.40
$
8.60
-
$
8.85
14.5
%
-
13.5
%
Reconciliation of Non-GAAP
Financial Measures – Fiscal 2024 Outlook for GAAP Net Cash Provided
by Operating Activities to Free Cash Flow (Non-GAAP) (1)
(2)
(Unaudited) (in
thousands)
Nine Months Ended November 30,
2023
Outlook for the
Balance of the
Fiscal Year
(Three Months)
Outlook Fiscal 2024
Net cash provided by operating activities
(GAAP)
$
232,459
$
62,541
—
$
77,541
$
295,000
—
$
310,000
Less: Capital and intangible asset
expenditures
(29,681
)
(15,319
)
—
(10,319
)
(45,000
)
—
(40,000
)
Free cash flow (non-GAAP)
$
202,778
$
47,222
—
$
67,222
$
250,000
—
$
270,000
HELEN OF TROY LIMITED AND SUBSIDIARIES
Notes to Press Release
(1)
This press release contains non-GAAP
financial measures. Adjusted Operating Income, Adjusted Operating
Margin, Adjusted Effective Tax Rate, Adjusted Income, Adjusted
Diluted EPS, EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Free
Cash Flow and Net Leverage Ratio (“Non-GAAP Financial Measures”)
that are discussed in the accompanying press release or in the
preceding tables may be considered non-GAAP financial measures as
defined by SEC Regulation G, Rule 100. Accordingly, the Company is
providing the preceding tables that reconcile these measures to
their corresponding GAAP-based financial measures. The Company is
unable to present a quantitative reconciliation of forward-looking
expected net leverage ratio to its most directly comparable
forward-looking GAAP financial measure because such information is
not available, and management cannot reliably predict all of the
necessary components of such GAAP financial measure without
unreasonable effort or expense. In addition, the Company believes
such reconciliation would imply a degree of precision that would be
confusing or misleading to investors. The Company believes that
these Non-GAAP Financial Measures provide useful information to
management and investors regarding financial and business trends
relating to its financial condition and results of operations. The
Company believes that these Non-GAAP Financial Measures, in
combination with the Company’s financial results calculated in
accordance with GAAP, provide investors with additional perspective
regarding the impact of certain charges and benefits on applicable
income, margin and earnings per share measures. The Company also
believes that these Non-GAAP Financial Measures facilitate a more
direct comparison of the Company’s performance with its
competitors. The Company further believes that including the
excluded charges and benefits would not accurately reflect the
underlying performance of the Company’s operations for the period
in which the charges and benefits are incurred, even though such
charges and benefits may be incurred and reflected in the Company’s
GAAP financial results in the near future. The material limitation
associated with the use of the Non-GAAP Financial Measures is that
the Non-GAAP Financial Measures do not reflect the full economic
impact of the Company’s activities. These Non-GAAP Financial
Measures are not prepared in accordance with GAAP, are not an
alternative to GAAP financial measures, and may be calculated
differently than non-GAAP financial measures disclosed by other
companies. Accordingly, undue reliance should not be placed on
non-GAAP financial measures.
(2)
Free cash flow represents net cash
provided by operating activities less capital and intangible asset
expenditures.
(3)
Net leverage ratio is calculated as (a)
total borrowings under the Company’s credit agreement plus
outstanding letters of credit, net of unrestricted cash and cash
equivalents at the end of the current period, divided by (b)
Adjusted EBITDA per the Company's credit agreement (calculated as
EBITDA plus non-cash charges and certain allowed addbacks, less
certain non-cash income, plus the pro forma effect of acquisitions
and certain pro forma run-rate cost savings for acquisitions and
dispositions, as applicable for the trailing twelve months ended as
of the current period).
(4)
Organic business refers to net sales
revenue associated with product lines or brands after the first
twelve months from the date the product line or brand is acquired,
excluding the impact that foreign currency remeasurement had on
reported net sales revenue. Net sales revenue from internally
developed brands or product lines is considered Organic business
activity.
(5)
On April 22, 2022, the Company completed
the acquisition of Curlsmith. As such, the three and nine months
ended November 30, 2023 include a full three and nine months,
respectively, of operating results from Curlsmith, compared to
approximately thirteen and thirty-two weeks of operating results in
the three and nine months ended November 30, 2022, respectively.
Curlsmith sales prior to the first annual anniversary of the
acquisition are reported in Acquisition. Sales from Curlsmith
subsequent to the first annual anniversary of the acquisition are
reported in Organic business.
(6)
Beginning in the fourth quarter of fiscal
2023, the Company included net sales revenue from the U.S. and
Canada as domestic net sales revenue. Previously, the Company
reported sales revenue from Canada within international net sales
revenue. The Company has recast all prior period domestic and
international net sales revenue presented to conform with this
current presentation.
(7)
Gain on the sale of distribution and
office facilities in El Paso, Texas during the third quarter of
fiscal year 2024.
(8)
Charges incurred in conjunction with EPA
packaging compliance for certain products in the air filtration,
water filtration and humidification categories within the Beauty
& Wellness segment.
(9)
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)
Represents a charge for uncollectible
receivables due to the bankruptcy of Bed, Bath & Beyond (“Bed,
Bath & Beyond bankruptcy”).
(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.
(12)
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/20240108251800/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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