- Delivers Fourth Quarter Revenue of
$377.7 Million; GAAP Diluted Earnings Per Share (EPS) of
$1.40
- Fourth Quarter Non-GAAP Adjusted
Diluted EPS of $1.66
- Expects Fiscal Year GAAP 2016
Diluted EPS in a Range of $4.33 to $4.73
- Expects Fiscal Year 2016 Non-GAAP
Adjusted Diluted EPS in a Range of $5.40 to $5.85
Helen of Troy Limited (NASDAQ, NM: HELE), designer, developer
and worldwide marketer of brand-name housewares, healthcare/home
environment, nutritional supplement and personal care consumer
products, today reported results for the three- and twelve-month
periods ended February 28, 2015.
Julien R. Mininberg, Chief Executive Officer, stated, “We are
pleased to report a strong fourth quarter, capping a successful
fiscal year of growth. Fourth quarter revenue rose approximately
21%, building on favorable third quarter results. Our
Healthcare/Home Environment and Housewares segments lead our core
business sales growth with double digit increases in the fourth
quarter. Our Nutritional Supplements segment, acquired in June
2014, grew in line with expectations. Our Personal Care business
slowed its decline in the fourth quarter as we make progress toward
stabilizing that segment. For the full fiscal year, despite foreign
currency headwinds, Helen of Troy grew revenue by 9.7%, adjusted
income by 16.6%, and adjusted diluted EPS by 30%.”
Mr. Mininberg continued, “Stepping back to assess the
transformational changes we embarked upon at the start of fiscal
year 2015, we have made significant progress toward our stated
goals of improving organic growth, improving our organization and
culture, and optimizing our capital structure. Marketing
investments behind new products and other demand creation
initiatives helped drive fiscal year 2015 core business growth of
2.1%, despite currency headwinds. These investments helped grow our
market shares in several core categories, and strengthened our
pipeline. We began upgrading and globalizing our shared services
capability and are seeing gains in both efficiency and
collaboration. We also made significant progress on culture change
in our businesses and worksites worldwide over the past year. Key
management changes in our global leadership team, shared services
and Personal Care division have been implemented, which include
both new leadership as well as internal promotions. Additionally,
we used our cash flow and balance sheet to increase value for
shareholders through share buybacks and the strategic acquisition
of Healthy Directions in fiscal year 2015, as well as the
acquisition of Vicks VapoSteam shortly after the end of the fiscal
year. I am delighted with the progress on these fronts, and believe
our Company is well positioned to build upon these accomplishments
as we continue to advance our strategic plan in fiscal year
2016.”
Key Highlights for the Fourth Quarter
of Fiscal Year 2015
- Net sales revenue increased $65.2
million, or 20.9%
- Core business net sales revenue
increased 8.9%, which includes a negative impact of 1.7 percentage
points from foreign currency fluctuations
- Healthcare/Home Environment rose 16.6%,
driven by new product introductions and a strong cold/flu
season
- Housewares rose 11.9%, driven by new
products, fill-in orders for expanded shelf space, and additional
web presence
- Personal Care declined 3.7%, which
includes a negative impact of 1.5 percentage points from foreign
currency fluctuations, compared to a 12.8% decline for the first
half of fiscal year 2015
- Healthy Directions contributed $37.3
million to net sales revenue
- Gross margin expanded 3.5 percentage
points to 43.7%
- Diluted EPS was $1.40 and adjusted
diluted EPS was $1.66 on 29.0 million shares outstanding
- Adjusted EBITDA increased 25.7% to
$61.2 million
- Foreign currency fluctuations
negatively impacted net sales revenue by $5.4 million
- Foreign currency exchange losses from
re-measurement, transactions and hedge settlements increased by
$1.8 million compared to the same period last year
- The Company recorded tax benefits of
$0.93 million, or $0.03 per diluted share
Fourth Quarter of Fiscal Year 2015
Consolidated Operating Results
- Net sales revenue increased 20.9% to
$377.7 million compared to $312.5 million in the fourth quarter of
fiscal year 2014. Foreign currency fluctuations decreased our U.S.
Dollar reported net sales revenue by $5.4 million, or 1.7
percentage points, year-over-year.
- Gross profit margin increased 3.5
percentage points to 43.7% compared to 40.2% for the same period
last year. This increase reflects the impact of the Nutritional
Supplements segment, which had a favorable impact of 3.3 percentage
points on the consolidated gross profit margin. Gross profit margin
for the core business improved by 0.2 percentage points despite the
negative impact of foreign currency fluctuations, which reduced our
reported gross profit margin by approximately 0.7 percentage
points.
- SG&A was 30.7% of net sales
compared to 34.8% of net sales for the same period last year. The
4.1 percentage point improvement is primarily due to $18.2 million
of CEO succession costs and higher share-based compensation expense
in the same period last year associated with our former CEO’s
employment and separation agreements. This improvement was
partially offset by: (i) a higher relative SG&A ratio in the
Nutritional Supplements segment; (ii) higher advertising and other
marketing expenditures in the core business; and (iii) higher
year-over-year net foreign currency exchange losses of $1.8 million
in the core business.
- Operating income was $49.0 million
compared to operating income of $16.7 million in the same period
last year.
- Income tax expense as a percentage of
pretax income was 11.5% compared to 22.7% for the same period last
year. The year-over-year comparison of our effective tax rate was
primarily impacted by shifts in the mix of taxable income in our
various tax jurisdictions.
- Net income was $40.6 million, or $1.40
per diluted share on 29.0 million weighted average diluted shares
outstanding, and includes tax benefits of $0.03 per share. This
compares to net income in the fourth quarter of fiscal year 2014 of
$11.0 million, or $0.34 per diluted share on 32.6 million weighted
average diluted shares outstanding, which included after-tax CEO
succession costs of $0.50 per diluted share.
- Adjusted EBITDA (EBITDA excluding
non-cash share-based compensation and CEO succession costs, as
applicable) was $61.2 million compared to $48.7 million in the same
period last year.
On an adjusted basis for the fourth quarter of fiscal years 2015
and 2014, excluding amortization of intangible assets, non‐cash
share based compensation and CEO succession costs (largely
non-cash), as applicable:
- Adjusted operating income was $57.3
million compared to $45.4 million for the fourth quarter of fiscal
year 2014.
- Adjusted income was $48.1 million, or
$1.66 per diluted share, compared to $35.6 million, or $1.09 per
diluted share, for the fourth quarter of fiscal year 2014.
Fiscal Year 2015 Consolidated Operating
Results
- Net sales revenue increased 9.7% to
$1.45 billion compared to $1.32 billion in fiscal year 2014.
Foreign currency fluctuations decreased our U.S. Dollar reported
net sales revenue by $7.5 million year-over-year, or 0.6 percentage
points.
- Gross profit margin was 41.5% compared
to 39.2% for the same period last year. This increase reflects
eight months of operations of the Nutritional Supplements segment,
which had a favorable impact of 2.3 percentage points on the
consolidated gross profit margin. Gross profit margin for the core
business was flat compared to the same period last year, despite
the impact of foreign currency fluctuations, which reduced our
reported gross profit margin by approximately 0.3 percentage
points.
- SG&A was 29.7% of net sales
compared to 29.4% of net sales for the same period last year
reflecting a higher relative SG&A ratio in the Nutritional
Supplements segment under its direct to consumer business model,
and $3.6 million of acquisition-related expenses. In the core
business, the SG&A ratio improved 2.2 percentage points
compared to fiscal year 2014 due to a combination of: (i) the
impact of CEO succession costs of $18.2 million in fiscal year
2014, with no comparable cost in fiscal year 2015; and (ii) the
impact of a $7.0 million gain from the amendment of a license
agreement in fiscal year 2015, partially offset by: (i) a $5.01
million increase in advertising and other marketing expenditures;
and (ii) a year over year increase in net foreign currency exchange
losses of $4.8 million.
- Operating income was $161.7 million,
which includes $9.0 million in non-cash asset impairment charges.
This is compared to operating income of $117.1 million in the same
period last year, which included CEO succession costs of $18.2
million and the impact of $12.0 million in non‐cash asset
impairment charges.
- Income tax expense as a percentage of
pretax income was 10.9% compared to 19.5% for the same period last
year. Fiscal year 2015 includes tax benefits of $4.4 million,
primarily related to the resolution of uncertain tax positions
- Net income was $131.2 million, or $4.52
per diluted share on 29.0 million weighted average diluted shares
outstanding, and includes the following: (i) an after-tax gain of
$0.24 per diluted share from the amendment of a license agreement;
(ii) an after-tax decrease in product liability estimates of $0.05
per diluted share; and (iii) tax benefits of $0.15 per diluted
share. This compares to net income of $86.3 million, or $2.66 per
diluted share on 32.4 million weighted average diluted shares
outstanding for the same period last year.
- Adjusted EBITDA (EBITDA excluding
non-cash share-based compensation, acquisition-related expenses,
non-cash asset impairment charges, and CEO succession costs as
applicable) was $220.4 million compared to $195.6 million in the
same period last year.
On an adjusted basis for fiscal years 2015 and 2014, excluding
non-cash asset impairment charges, CEO succession costs,
acquisition-related expenses, amortization of intangible assets,
and non‐cash share based compensation in both periods, as
applicable:
- Adjusted operating income was $205.6
million compared to $183.2 million in fiscal year 2014. Fiscal year
2015 adjusted operating income includes a pre-tax gain of $7
million on the amendment of a license agreement and a pre-tax
decrease in product liability estimates of $2.2 million.
- Adjusted income was $169.9 million, or
$5.85 per diluted share, which includes the after-tax gain of $0.24
per diluted share from the amendment of a license agreement, the
after-tax decrease in product liability estimates of $0.05 per
diluted share and tax benefits of $0.15 per diluted share. This
compares to $145.8 million, or $4.50 per diluted share, for fiscal
year 2014.
Balance Sheet Highlights
- Cash and cash equivalents totaled $12.3
million at February 28, 2015, compared to $70.0 million at February
28, 2014.
- Total short- and long-term debt
increased to $433.2 million at February 28, 2015, compared to
$192.6 million at February 28, 2014. The increase primarily
reflects borrowings incurred in conjunction with the repurchase of
$273.6 million of common stock in the first quarter of fiscal year
2015 and the acquisition of Healthy Directions for $195.9 million
in the second quarter of fiscal year 2015, offset by net repayments
of $228.9 million.
- Accounts receivable turnover was 58.6
days at February 28, 2015, compared to 63.7 days at February 28,
2014.
- Inventory was $293.1 million at
February 28, 2015, compared to $289.3 million at February 28,
2014.
Subsequent Event
On March 31, 2015, the Company announced that it had acquired
the Vicks® VapoSteam® U.S. liquid inhalant business from The
Procter & Gamble Company (“P&G”), which includes a fully
paid-up license to the Vicks VapoSteam trademarks. In a related
transaction, the Company also acquired a fully paid-up license of
P&G’s Vicks VapoPad® trademarks for scent pads in the United
States. The vast majority of Vicks VapoSteam and VapoPads are used
in Vicks humidifiers, vaporizers and other health care devices
already marketed by Helen of Troy. The transaction includes the
acquisition of certain production assets and the inventory related
to the above categories, as well as the right to use related
intellectual property. The VapoSteam acquisition was financed with
the Company’s revolving credit facility. The United States Vicks
VapoSteam business that was part of the transaction had annual
revenues of approximately $10 million in calendar year 2014. The
aggregate consideration for the two transactions was approximately
$42.8 million.
Fiscal Year 2016 Annual
Outlook
For fiscal year 2016, the Company expects consolidated net sales
revenue in the range of $1.485 to $1.536 billion and diluted EPS
(GAAP) in the range of $4.33 to $4.73. The Company expects
projected sales and diluted EPS (GAAP) from the VapoSteam
acquisition to be in the range of $10 million to $11 million and
$0.03 to $0.08, respectively, for the eleven months included in our
fiscal year 2016 results.
The Company expects consolidated adjusted diluted EPS (non-GAAP)
to be in the range of $5.40 to $5.85, which excludes after-tax
non-cash share-based compensation expense and intangible asset
amortization expense. The Company expects adjusted diluted EPS
(non-GAAP) for VapoSteam to be in the range of $0.04 to $0.11,
which excludes after-tax non-cash share-based compensation expense
and intangible asset amortization expense.
Our fiscal year 2016 outlook assumes current foreign currency
exchange rates for the remainder of the fiscal year, which are
expected to negatively impact year-over-year net sales revenue by
approximately $28.0 million, net income by approximately $17.0
million, and earnings per share by approximately $0.59. The diluted
EPS outlook is based on an estimated weighted average shares
outstanding of 29.0 million for the full fiscal year 2016. Further,
the Company’s guidance assumes that the severity of the cold/flu
season will be in line with historical averages. The likelihood and
potential impact of any fiscal year 2016 acquisitions other than
VapoSteam, asset impairment charges, future foreign currency
fluctuations, including any potential currency devaluation in
Venezuela, or share repurchases are unknown and cannot be
reasonably estimated; therefore they are not included in the
Company’s sales and earnings outlook.
As a reminder, in fiscal year 2015 the Company benefitted from
an after-tax gain of $0.24 per share from the amendment of a
license agreement, an after-tax decrease in product liability
estimates of $0.05 per share and tax benefits of $0.15 per share
that are not expected to repeat in fiscal year 2016. These items
negatively impact the year-over-year comparison of adjusted diluted
EPS by a combined $0.44.
Conference Call and
Webcast
The Company will conduct a teleconference in conjunction with
today's earnings release. The teleconference begins at 4:45 pm
Eastern Time today, Tuesday, April 28, 2015. Institutional
investors and analysts interested in participating in the call are
invited to dial (888) 455-2296 approximately ten minutes prior to
the start of the call. The conference call will also be webcast
live at: www.hotus.com. A telephone replay of this call will be
available at 7:45 p.m. Eastern Time on April 28, 2015 until 11:59
p.m. Eastern Time on May 5, 2015 and can be accessed by dialing
(877) 870-5176 and entering replay pin number 2810701. A replay of
the webcast will remain available on the website for 60 days.
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 financial measures, such as
adjusted operating income, adjusted income, adjusted diluted EPS,
EBITDA and adjusted EBITDA, 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 consolidated statements of income.
About Helen of Troy
Limited:
Helen of Troy Limited is a leading global consumer products
company offering creative solutions for its customers through a
strong portfolio of well-recognized and widely-trusted brands,
including: Housewares: OXO®, Good Grips®, Soft Works®, OXO tot® and
OXO Steel®; Healthcare/Home Environment: Vicks®, Braun®,
Honeywell®, PUR®, Febreze®, Stinger®, Duracraft® and SoftHeat®; and
Personal Care: Revlon®, Vidal Sassoon®, Dr. Scholl's®, Pro Beauty
Tools®, Sure®, Pert®, Infusium23®, Brut®, Ammens®, Hot Tools®, Bed
Head®, Karina®, Ogilvie® and Gold 'N Hot®. The Nutritional
Supplements segment was formed with the recent acquisition of
Healthy Directions, a U.S. market leader in premium doctor-branded
vitamins, minerals and supplements, as well as other health
products sold directly to consumers. The Honeywell® trademark is
used under license from Honeywell International Inc. The Vicks®,
Braun®, Febreze® and Vidal Sassoon® trademarks are used under
license from The Procter & Gamble Company. The Revlon®
trademark is used under license from Revlon Consumer Products
Corporation. The Bed Head® trademark is used under license from
Unilever PLC. The Dr. Scholl's® trademark is used under license
from MSD Consumer Care, Inc.
For more information about Helen of Troy, please visit
www.hotus.com.
Forward Looking
Statements:
This press release may contain forward-looking statements, which
are subject to change. The forward-looking statements are made
pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Any or all of the forward-looking
statements may turn out to be wrong. They can be affected by
inaccurate assumptions or by known or unknown risks and
uncertainties. Many of these factors will be important in
determining the Company's actual future results. Consequently, no
forward-looking statement can be guaranteed. Actual future results
may vary materially from those expressed or implied in any
forward-looking statements. The forward-looking statements are
qualified in their entirety by a number of risks that could cause
actual results to differ materially from historical or anticipated
results. Generally, the words "anticipates", "estimates",
"believes", "expects", "plans", "may", "will", "should", "seeks",
"project", "predict", "potential", "continue", "intends", and other
similar words identify forward-looking statements. The Company
cautions readers not to place undue reliance on forward-looking
statements. The Company intends its forward-looking statements to
speak only as of the time of such statements, and does not
undertake to update or revise them as more information becomes
available. 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, 2015 and in our 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 departure and recruitment of key personnel, the
Company's ability to deliver products to our customers in a timely
manner, the costs of complying with the business demands and
requirements of large sophisticated customers, the Company's
relationship with key customers and licensors, our dependence on
the strength of retail economies and vulnerabilities to an economic
downturn, expectations regarding acquisitions and the integration
of acquired businesses, exchange rate risks, disruptions in U.S.,
European and other international credit markets, risks associated
with weather conditions, the Company’s dependence on foreign
sources of supply and foreign manufacturing, risks associated with
the availability, purity and integrity of materials used in
nutritional supplements, the impact of changing costs of raw
materials and energy on cost of goods sold and certain operating
expenses, the Company's geographic concentration of certain U.S.
distribution facilities, which increases our exposure to
significant shipping disruptions and added shipping and storage
costs, the Company's projections of product demand, sales, net
income and earnings per share are highly subjective and our future
net sales revenue and net income could vary in a material amount
from such projections, circumstances that may contribute to future
impairment of goodwill, intangible or other long-lived assets, the
risks associated with the use of trademarks licensed from and to
third parties, the Company's ability to develop and introduce
innovative new products to meet changing consumer preferences,
increased product liability and reputational risks associated with
the formulation and distribution of nutritional supplements, risks
associated with adverse publicity and negative public perception
regarding the use of nutritional supplements, trade barriers,
exchange controls, expropriations, and other risks associated with
foreign operations, the Company’s debt leverage and the constraints
it may impose, the costs, complexity and challenges of upgrading
and managing our global information systems, the risks associated
with information security breaches, the increased complexity of
compliance with a number of new government regulations as a result
of adding nutritional supplements to the Company’s portfolio of
products, the risks associated with tax audits and related disputes
with taxing authorities, potential changes in laws, including tax
laws, and the Company's ability to continue to avoid classification
as a controlled foreign corporation.
HELEN OF TROY LIMITED AND SUBSIDIARIES
Consolidated Condensed Statements of Income and Reconciliation
of Non-GAAP Financial Measures - Adjusted Operating Income,
Adjusted Income and Adjusted Diluted Earnings per Share
("EPS") (Unaudited) (in thousands, except per share
data) Three Months Ended February 28,
2015 2014 As Reported (GAAP)
Adjustments(1)
Adjusted(non-GAAP)(1)
As Reported (GAAP)
Adjustments(1)
Adjusted(non-GAAP)(1)
Sales revenue, net $ 377,730 100.0 % $ - $ 377,730
100.0 % $ 312,520 100.0 % $ - $ 312,520 100.0 % Cost
of goods sold 212,846 56.3 % - 212,846 56.3 %
186,938 59.8 % - 186,938 59.8 % Gross profit
164,884 43.7 % - 164,884 43.7 % 125,582 40.2 % - 125,582 40.2 %
Selling, general, and administrative expense 115,934 30.7 %
- 107,598 28.5 % 108,857 34.8 % (18,228) (2) 80,231 25.7 % (1,435)
(3) (5,032) (3) (6,901) (4) (5,366) (4) Asset impairment charges
- - % - - - % - - % - - -
% Operating income 48,950 13.0 % 8,336 57,286
15.2 % 16,725 5.4 % 28,626 45,351 14.5 %
Nonoperating income, net 283 0.1 % - 283 0.1 % 74 - % - 74 -
% Interest expense (3,434) (0.9) % - (3,434)
(0.9) % (2,546) (0.8) % - (2,546) (0.8) %
Total other expense (3,151) (0.8) % - (3,151)
(0.8) % (2,472) (0.8) % - (2,472) (0.8) %
Income before income taxes 45,799 12.1 % 8,336 54,135 14.3 % 14,253
4.6 % 28,626 42,879 13.7 % Income tax expense 5,249
1.4 % 831 (7) 6,080 1.6 % 3,239 1.0 %
4,052 (7) 7,291 2.3 % Net income $ 40,550 10.7 % $ 7,505 $
48,055 12.7 % $ 11,014 3.5 % $ 24,574 $ 35,588 11.4 %
Diluted EPS $ 1.40 $ 0.26 $ 1.66 $ 0.34 $ 0.75 $ 1.09
Weighted average shares of common
stockused in computing diluted EPS
29,016 - 29,016 32,613 (169) 32,444
The years
ended February 28, 2015 2014 As Reported
(GAAP)
Adjustments(1)
Adjusted(non-GAAP)(1)
As Reported (GAAP)
Adjustments(1)
Adjusted(non-GAAP)(1)
Sales revenue, net $ 1,445,131 100.0 % $ - $ 1,445,131 100.0 % $
1,317,153 100.0 % $ - $ 1,317,153 100.0 % Cost of goods sold
845,572 58.5 % - 845,572 58.5 % 800,450 60.8 %
- 800,450 60.8 % Gross profit 599,559 41.5 % -
599,559 41.5 % 516,703 39.2 % - 516,703 39.2 % Selling,
general, and administrative expense 428,840 29.7 % - 393,927 27.3 %
387,554 29.4 % (18,228) (2) 333,482 25.3 % (5,974) (3) (14,232) (3)
(25,328) (4) (21,612) (4) (3,611) (5) - (5) Asset impairment
charges 9,000 0.6 % (9,000) (6) - - %
12,049 0.9 % (12,049) (6) - - % Operating income
161,719 11.2 % 43,913 205,632 14.2 %
117,100 8.9 % 66,121 183,221 13.9 %
Nonoperating income, net 517 - % - 517 - % 227 - % - 227 - %
Interest expense (15,022) (1.0) % - (15,022)
(1.0) % (10,193) (0.8) % - (10,193) (0.8) %
Total other expense (14,505) (1.0) % -
(14,505) (1.0) % (9,966) (0.8) % - (9,966)
(0.8) % Income before income taxes 147,214 10.2 % 43,913 191,127
13.2 % 107,134 8.1 % 66,121 173,255 13.2 % Income tax
expense 16,050 1.1 % 5,154 (7) 21,204 1.5 %
20,886 1.6 % 6,595 (7) 27,481 2.1 % Net income
$ 131,164 9.1 % $ 38,759 $ 169,923 11.8 % $ 86,248 6.5 % $ 59,526 $
145,774 11.1 % Diluted EPS $ 4.52 $ 1.33 $ 5.85 $ 2.66 $
1.84 $ 4.50
Weighted average shares of common
stockused in computing diluted EPS
29,035 - 29,035 32,386 (42) 32,344
HELEN OF TROY
LIMITED AND SUBSIDIARIES Net Sales Revenue by
Segment (Unaudited) (in thousands)
Three Months Ended February 28,
% of Sales Revenue, net 2015 2014 $
Change % Change 2015 2014 Sales revenue by
segment, net Housewares $ 73,875 $ 66,007 $ 7,868 11.9 % 19.6 %
21.1 % Healthcare / Home Environment 167,552 143,677 23,875 16.6 %
44.4 % 46.0 % Nutritional Supplements (8) 37,299 - 37,299 * 9.9 % -
% Personal Care 99,004 102,836 (3,832) (3.7) %
26.1 % 32.9 % Total sales revenue, net $ 377,730 $ 312,520 $ 65,210
20.9 % 100.0 % 100.0 %
Year Ended February 28,
% of Sales Revenue, net 2015 2014 $
Change % Change 2015 2014 Sales revenue by
segment, net Housewares $ 296,252 $ 274,478 $ 21,774 7.9 % 20.5 %
20.8 % Healthcare / Home Environment 613,253 568,075 45,178 8.0 %
42.4 % 43.1 % Nutritional Supplements (8) 100,395 - 100,395 * 6.9 %
- % Personal Care 435,231 474,600 (39,369)
(8.3) % 30.1 % 36.0 % Total sales revenue, net $ 1,445,131 $
1,317,153 $ 127,978 9.7 % 100.0 % 100.0 %
* Calculation is not meaningful
HELEN OF TROY LIMITED AND SUBSIDIARIES
Selected Consolidated Balance Sheet, Cash Flow and Liquidity
Information (Unaudited) (in thousands)
February 28, 2015 2014 Balance Sheet:
Cash and cash equivalents $ 12,295 $ 70,027 Receivables 222,499
213,054 Inventory 293,081 289,255 Total assets, current 564,760
615,476 Total assets 1,653,755 1,533,302 Total liabilities, current
261,865 329,354 Total long-term liabilities 487,325 174,461 Total
Debt 433,207 192,607 Stockholders' equity 904,565 1,029,487
Cash Flow: Depreciation and amortization $ 39,653 $ 33,839 Net cash
provided by operating activities 178,603 154,165 Capital and
intangible asset expenditures 6,521 40,463 Payments to acquire
businesses, net of cash received 195,943 - Net amounts borrowed
(repaid) 240,600 (64,393) Liquidity: Working Capital $
302,895 $ 286,122 Leverage Ratio (10) 1.93 0.99
SELECTED OTHER DATA Reconciliation of Non-GAAP
Financial Measures - EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization) and Adjusted
EBITDA (Unaudited) (in thousands)
Three Months Ended February 28, Year Ended
February 28, 2015 2014 2015
2014 Net income $ 40,550 $ 11,014 $ 131,164 $ 86,248
Interest expense, net 3,424 2,530 14,965 10,128
Income tax expense 5,249 3,239 16,050 20,886 Depreciation
and amortization, excluding amortized interest 10,578
8,655 39,653 33,839 EBITDA (Earnings before
interest, taxes, depreciation and amortization) (1) $ 59,801 $
25,438 $ 201,832 $ 151,101 Adjusted EBITDA: EBITDA,
as calculated above (1) $ 59,801 $ 25,438 $ 201,832 $ 151,101
Add: CEO succession costs (2) - 18,228 - 18,228
Non-cash share-based compensation (3) 1,435 5,032 5,974 14,232
Acquisition-related expenses (5) - - 3,611 - Non-cash
asset impairment charges (6) - - 9,000
12,049 Adjusted EBITDA (1) $ 61,236 $ 48,698 $ 220,417 $
195,610
SELECTED OTHER DATA
Reconciliation of Non-GAAP Financial Measures - EBITDA (Earnings
Before Interest, Taxes, Depreciation and Amortization)
and Adjusted EBITDA by Segment (Unaudited) (in
thousands) Three Months
Ended February 28, 2015 Housewares
Healthcare
/HomeEnvironment
NutritionalSupplements(8)
Personal Care Total Operating Income $ 14,191
$ 18,902 $ 3,188 $ 12,669 $ 48,950 Depreciation and
amortization, excluding amortized interest 946 5,148 1,989 2,495
10,578 Other income / (expense) - - -
273 273 EBITDA (Earnings before interest,
taxes, depreciation and amortization) (1) $ 15,137 $ 24,050 $ 5,177
$ 15,437 $ 59,801 Adjusted EBITDA: EBITDA, as
calculated above (1) $ 15,137 $ 24,050 $ 5,177 $ 15,437 $ 59,801
Add: CEO succession costs (2) - - - - - Non-cash
share-based compensation (3) 113 223 499 600 1,435
Acquisition-related expenses (5) - - - - - Non-cash asset
impairment charges (6) - - - - -
Adjusted EBITDA (1) $ 15,250 $ 24,273 $ 5,676 $ 16,037 $
61,236
Three Months Ended February 28, 2014
Housewares
Healthcare
/HomeEnvironment
NutritionalSupplements(8)
Personal Care Total Operating Income $ 9,322 $
(1,411) $ - $ 8,814 $ 16,725 Depreciation and amortization,
excluding amortized interest 593 5,020 - 3,042 8,655 Other
income / (expense) - - - 58 58
EBITDA (Earnings before interest, taxes, depreciation and
amortization) (1) $ 9,915 $ 3,609 $ - $ 11,914 $ 25,438
Adjusted EBITDA: EBITDA, as calculated above (1) $ 9,915 $
3,609 $ - $ 11,914 $ 25,438 Add: CEO succession costs (2)
3,644 7,916 - 6,668 18,228 Non-cash share-based compensation
(3) 851 1,763 - 2,418 5,032 Acquisition-related expenses (5)
- - - - - Non-cash asset impairment charges (6) -
- - - - Adjusted EBITDA (1) $
14,410 $ 13,288 $ - $ 21,000 $ 48,698
SELECTED
OTHER DATA Reconciliation of Non-GAAP Financial
Measures - EBITDA (Earnings Before Interest, Taxes, Depreciation
and Amortization) and Adjusted EBITDA by Segment
(Unaudited) (in thousands)
Year Ended February 28, 2015 Housewares
Healthcare
/HomeEnvironment
NutritionalSupplements(8)
Personal Care Total Operating Income $ 59,392
$ 50,821 $ 9,512 $ 41,994 $ 161,719 Depreciation and
amortization, excluding amortized interest 3,615 20,532 5,380
10,126 39,653 Other income / (expense) - -
- 460 460 EBITDA (Earnings before
interest, taxes, depreciation and amortization) (1) $ 63,007 $
71,353 $ 14,892 $ 52,580 $ 201,832 Adjusted EBITDA:
EBITDA, as calculated above (1) $ 63,007 $ 71,353 $ 14,892 $ 52,580
$ 201,832 Add: CEO succession costs (2) - - - - -
Non-cash share-based compensation (3) 758 1,115 499 3,602 5,974
Acquisition-related expenses (5) - - 3,611 - 3,611
Non-cash asset impairment charges (6) - - -
9,000 9,000 Adjusted EBITDA (1) $ 63,765 $
72,468 $ 19,002 $ 65,182 $ 220,417
Year Ended
February 28, 2014 Housewares
Healthcare
/HomeEnvironment
NutritionalSupplements(8)
Personal Care Total Operating Income $ 50,828
$ 20,764 $ - $ 45,508 $ 117,100 Depreciation and
amortization, excluding amortized interest 3,461 19,318 - 11,060
33,839 Other income / (expense) - - -
162 162 EBITDA (Earnings before interest,
taxes, depreciation and amortization) (1) $ 54,289 $ 40,082 $ - $
56,730 $ 151,101 Adjusted EBITDA: EBITDA, as
calculated above (1) $ 54,289 $ 40,082 $ - $ 56,730 $ 151,101
Add: CEO succession costs (2) 3,644 7,916 - 6,668 18,228
Non-cash share-based compensation (3) 2,400 4,966 - 6,866
14,232 Acquisition-related expenses (5) - - - - -
Non-cash asset impairment charges (6) - - -
12,049 12,049 Adjusted EBITDA (1) $ 60,333 $
52,964 $ - $ 82,313 $ 195,610
HELEN OF TROY
LIMITED AND SUBSIDIARIES Reconciliation of Reported
Net Income and Earnings Per Share (EPS) to Adjusted Income and
Adjusted EPS (non-GAAP) (dollars in thousands, except
per share data) (Unaudited)
Three Months Ended February 28, Basic
EPS Diluted EPS 2015 2014 2015
2014 2015 2014 Net income as reported
(GAAP) $ 40,550 $ 11,014 $ 1.42 $ 0.34 $ 1.40 $ 0.34 CEO succession
costs, net of tax (2) - 16,335 - 0.51 - 0.50 Acquisition-related
expenses, net of tax (5) - - - - - - Asset impairment charges, net
of tax (6) - - - - - -
Subtotal 40,550 27,349 1.42 0.85
1.40 0.84 Non-cash share-based compensation, net of tax (3)
1,287 3,091 0.05 0.10 0.04 0.09 Amortization of intangible assets,
net of tax (4) 6,218 5,148 0.22 0.16
0.21 0.16 Adjusted income (non-GAAP) (1) $ 48,055 $
35,588 $ 1.69 $ 1.11 $ 1.66 $ 1.09 Weighted average shares
of common stock used in computing basic and diluted earnings per
share (GAAP) 28,495 32,081 29,016 32,613 Dilutive impact of CEO
succession costs (2) - - - (169) Weighted average shares of common
stock used in
computing basic and diluted earnings per share (non-GAAP)
28,495 32,081 29,016 32,444
Year Ended February 28, Basic EPS Diluted EPS
2015 2014 2015 2014 2015
2014 Net income as reported (GAAP) $ 131,164 $ 86,248
$ 4.59 $ 2.69 $ 4.52 $ 2.66 CEO succession costs, net of tax (2) -
16,335 - 0.51 - 0.51 Acquisition-related expenses, net of tax (5)
2,306 - 0.08 - 0.08 - Asset impairment charges, net of tax (6)
8,155 12,034 0.29 0.38 0.28
0.37 Subtotal 141,625 114,617 4.96
3.58 4.88 3.54 Non-cash share-based
compensation, net of tax (3) 5,313 10,416 0.19 0.33 0.18 0.32
Amortization of intangible assets, net of tax (4) 22,985
20,741 0.80 0.64 0.79 0.64
Adjusted income (non-GAAP) (1) $ 169,923 $ 145,774 $ 5.95 $ 4.55 $
5.85 $ 4.50 Weighted average shares of common stock used in
computing basic and diluted earnings per share (GAAP) 28,579 32,007
29,035 32,386 Dilutive impact of CEO succession costs (2) - - -
(42) Weighted average shares of common stock used in
computing basic and
diluted earnings per share (non-GAAP) 28,579 32,007
29,035 32,344
HELEN OF TROY LIMITED
AND SUBSIDIARIES Reconciliation of Fiscal Year 2016
Reported Outlook for Diluted Earnings Per Share (EPS) to
Adjusted Diluted EPS (Unaudited)
Outlook for the Fiscal Year Ended February 29,
2016 (9) Core Business Healthy Directions
VapoSteam Acquisition Consolidated (Twelve
Months) (Twelve Months) (Eleven Months)
(Twelve Months) Diluted EPS, as reported (GAAP) $
3.95 - $ 4.28 $ 0.35 - $ 0.37 $ 0.03 - $ 0.08 $ 4.33 - $ 4.73
Non-cash share-based compensation, net of tax (3) 0.23 -
0.26 0.02 - 0.02 - - - 0.25 - 0.28 Amortization of
intangible assets, net of tax (4) 0.69 - 0.69
0.12 - 0.12 0.01 - 0.03 0.82 -
0.84 Adjusted diluted EPS (non-GAAP) (1) $ 4.87 - $ 5.23 $
0.49 - $ 0.51 $ 0.04 - $ 0.11 $ 5.40 - $ 5.85
HELEN OF TROY LIMITED AND SUBSIDIARIES
Notes to Press Release
(1) This press release contains non-GAAP financial measures.
Adjusted operating income, adjusted income, adjusted diluted EPS,
EBITDA and adjusted EBITDA (“Non-GAAP measures”) that are discussed
in the accompanying press release or in the preceding tables are
considered non-GAAP financial information as contemplated by SEC
Regulation G, Rule 100. Accordingly, we are providing the preceding
tables that reconcile these measures to their corresponding
GAAP-based measures presented in our Consolidated Statements of
Income in the accompanying tables to the press release. 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 measures, in combination with
the Company's financial results calculated in accordance with GAAP,
provides investors with additional perspective. The Company further
believes that the items excluded from certain non-GAAP measures do
not accurately reflect the underlying performance of its continuing
operations for the periods in which they are incurred, even though
some of these excluded items may be incurred and reflected in the
Company's GAAP financial results in the foreseeable future. The
material limitation associated with the use of the non-GAAP
financial 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. (2) Adjustments consist of CEO
succession costs of $18.2 million ($16.3 million after tax) for the
fourth quarter and full fiscal year 2014 incurred in connection
with the former CEO’s separation from the Company in the fourth
quarter of fiscal year 2014. The CEO succession costs will be
largely settled through the issuance of the Company’s common stock
to our former CEO, which had a dilutive impact on weighted average
shares of common stock outstanding of 169,000 and 42,000 shares,
respectively, for the fourth quarter and full fiscal year 2014.
(3) Adjustments consist of non-cash share-based compensation
expense of $1.44 million ($1.29 million after tax) and $5.97
million ($5.31 million after tax), respectively, for the fourth
quarter and full fiscal year 2015, and $5.03 million ($3.09 million
after tax) and $14.23 million ($10.42 million after tax),
respectively, for the fourth quarter and full fiscal year 2014.
These adjustments do not include $17.4 million ($15.6 million after
tax) of non-cash share based compensation expense included in the
settlement of certain CEO succession costs referred to in Note (2)
above. Share-based compensation expense is recognized for
share-based awards outstanding under share-based compensation
plans. These awards consist of stock options granted to certain
officers, employees and new hires, restricted stock grants to
certain members of the Company’s Board of Directors, and
performance based and time vested restricted stock awards granted
to management. (4) Adjustments consist of non-cash
intangible asset amortization expense of $6.90 million ($6.22
million after tax) and $25.33 million ($22.99 million after tax),
respectively, for the fourth quarter and full fiscal year 2015, and
$5.37 million ($5.15 million after tax) and $21.61 million ($20.74
million after tax), respectively, for the fourth quarter and full
fiscal year 2014. (5) Adjustment consists of expenses of
$3.61 million ($2.31 million after tax) incurred in connection with
the Healthy Directions acquisition in the second quarter of fiscal
year 2015. (6) Adjustments consist of non-cash asset
impairment charges of $9.00 million ($8.16 million after tax) and
$12.05 million ($12.03 million after tax) recorded during the first
quarters of fiscal years 2015 and 2014, respectively, as a result
of our annual evaluation of goodwill and indefinite-lived
intangible assets for impairment. The non-cash charges relate to
certain trademarks in our Personal Care segment, which were written
down to their estimated fair value, determined on the basis of
future discounted cash flows using the relief from royalty
valuation method. (7) Total tax effects of adjustments
described in Notes 2 through 6, for each of the periods presented:
Three Months Ended February 28, Year
Ended February 28, 2015 2014 2015
2014
Tax Effects of
Adjustments
CEO succession costs (2) $ - $ (1,893) $ - $ (1,893) Non-cash
share-based compensation (3) (147) (1,941) (661) (3,816)
Amortization of intangible assets (4) (684) (218) (2,343) (871)
Acquisition-related expenses (5) - - (1,305) - Asset impairment
charges (6) - - (845) (15) Total $
(831) $ (4,052) $ (5,154) $ (6,595) (8) The
Nutritional Supplements segment includes three and eight months of
operating results for the fourth quarter and fiscal year 2015,
respectively, as the segment was acquired on June 30, 2014.
(9) The diluted EPS outlook is based on an estimated weighted
average shares outstanding of 29.00 million for fiscal year 2016.
(10) The leverage ratio is computed as defined in the
Company’s revolving credit agreement, which is as follows:
Funded Indebtedness (a) EBITDA (b) + Pro Forma Effect of
Acquisitions (c)
(a) Funded Indebtedness: total debt plus
the total letters of credit outstanding at the end of the reporting
period.
(b) EBITDA: earnings before non-cash
charges, interest expense, taxes, depreciation and amortization
expense, and share-based compensation for the latest reported four
consecutive fiscal quarters.
(c) Pro Forma Effect of Acquisitions: for
any acquisition, pre-acquisition EBITDA of the acquired business so
that EBITDA of the acquired business includes the latest twelve
month trailing total.
Investors:ICR, Inc.Allison Malkin / Anne Rakunas203-682-8200 /
310-954-1113
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