Current Report Filing (8-k)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): October 8, 2015

HELEN OF TROY LIMITED

(Exact name of registrant as specified in its charter)

Commission File Number: 001-14669

Bermuda		74-2692550
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

2 CLARENDON HOUSE

CHURCH STREET

HAMILTON, BERMUDA

(Business address of registrant)

ONE HELEN OF TROY PLAZA

EL PASO, TEXAS 79912

(United States mailing address of registrant and zip code)

915-225-8000

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operation and Financial Condition.

On October 8, 2015, Helen of Troy Limited (the “Company”) issued a press release announcing the results for its second fiscal quarter and six months ended August 31, 2015. Additionally, on October 8, 2015, the Company held a conference call discussing its results for the same period mentioned above. With this Form 8-K, we are furnishing copies of the press release (attached hereto as Exhibit 99.1) and the text of the conference call (attached hereto as Exhibit 99.2). The press release and copy of the text of this conference call are also provided on the Investor Relations Page of our website at: http://www.hotus.com. The information contained on this website is not included as a part of, or incorporated by reference into, this report.

The Company desires to avail itself of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “Act”) and is including this cautionary statement for the express purpose of availing itself of the protection afforded by the Act. The accompanying press release and conference call transcript contain certain forward-looking statements, which are subject to change. 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.

The press release and copy of the text of this conference call include or refer to certain information that the Company believes is non-GAAP Financial Information as contemplated by SEC Regulation G, Rule 100. The press release contains tables that reconcile these measures to their corresponding GAAP based measures presented in the Company’s Consolidated Statements of Income. 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.

The information in this Item 2.02 of this Form 8-K and Exhibits 99.1 and 99.2 attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or any proxy statement or report or other document we may file with the SEC, regardless of any general incorporation language in any such filing, except as shall be expressly set forth by specific reference in such filing.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit Number		Description
99.1		Press Release, dated October 8, 2015
99.2		Text of conference call held October 8, 2015

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HELEN OF TROY LIMITED


Date: October 15, 2015	/s/ Brian L. Grass
	Brian L. Grass
	Chief Financial Officer and Principal Financial Officer

Index to Exhibits

Exhibit Number		Description
99.1		Press Release, dated October 8, 2015
99.2		Text of conference call held October 8, 2015

EXHIBIT 99.1

Helen of Troy Limited Reports

Second Quarter Fiscal Year 2016 Results

· Delivers Second Quarter Revenue of $369.1 Million; GAAP Diluted Earnings Per Share (EPS) of $0.84

· Second Quarter Non-GAAP Adjusted Diluted EPS of $1.12

· Company now Expects Fiscal Year 2016 GAAP Diluted EPS in a Range of $4.43 to $4.73 and Fiscal Year 2016 Non-GAAP Adjusted Diluted EPS in a Range of $5.50 to $5.85

EL PASO, Texas, October 8, 2015 — Helen of Troy Limited (NASDAQ, NM: HELE), designer, developer and worldwide marketer of consumer brand-name housewares, healthcare/home environment, nutritional supplement and beauty products, today reported results for the three-month period ended August 31, 2015.

Julien R. Mininberg, Chief Executive Officer, stated: “We had a strong second quarter, with year-over-year revenue growth of 15.4% and core business revenue growth of 10.9%, both of which include a foreign currency drag of 2.7%. All business segments grew in the second quarter, including Beauty. We continue to make progress on our key initiatives in product innovation, brand marketing, talent development, shared services and collaboration across our business segments, positioning us well to accomplish the goals we have set for this full fiscal year. With capital allocation representing a key component of our strategic plan, we returned capital to shareholders by repurchasing $50.0 million of our common stock on the open market. Since the second quarter of last year, we have invested $92.8 million in acquisition and share repurchase, while reducing our total debt by $125.3 million.

For the first six months of fiscal year 2016, revenue grew 13.1% year-over-year, and core business revenue increased 4.5%, despite a foreign currency drag of 2.6%. Our Healthcare/Home Environment segment saw revenue growth of 6.5% for the first half of fiscal 2016, driven by successful new product introductions and strong retail sell-through of seasonal products. The Nutritional Supplements segment contributed over $77 million to revenue for the first half of fiscal 2016. Housewares grew revenue by 5.6% for the first half of fiscal 2016, driven by strong point-of-sale activity, and new product introductions, partially offset by a shift in timing of customer orders into the fourth quarter of fiscal year 2015. Beauty segment sales increased 2.3% for the first half of fiscal 2016 despite a foreign currency drag of 2.4%, supported by new distribution in foot care and new product introductions. We believe the Beauty segment results reflect further progress toward stabilization.

We expect continued progress in the second half of the fiscal year. Our outlook reflects further progress on our key initiatives, as well as our cautious view on the upcoming cold and flu season, retail inventory levels, upward pressure on hourly wages, foreign currency and the global economic environment.”

Key Highlights for the Second Quarter of Fiscal Year 2016 Compared to the Second Quarter of Fiscal Year 2015

· Net sales revenue increased $49.2 million, or 15.4%, which includes a 10.9% increase in core business net sales revenue (excluding incremental sales from Nutritional Supplements and VapoSteam). The increase in net sales revenue includes a negative impact of 2.7% from foreign currency fluctuations.

· Healthcare/Home Environment rose 13.5%, driven by successful new product introductions, strong retail sell-through of fans due to the sustained high summer temperatures in many

regions, partially offset by declines in water filtration and air purification and a negative impact of $5.7 million, or 4.5% from foreign currency fluctuations.

· Housewares increased 13.2%, primarily due to successful new product introductions and strong point-of-sale activity.

· Beauty increased 9.6%, which included a negative impact of $2.6 million, or 2.6%, from foreign currency fluctuations. Growth was driven by new product distribution in foot care, increases in the professional curling iron category, the resolution of the West Coast port disruption that pushed sales from the first quarter into the second quarter of fiscal year 2016, and the comparative impact of inventory reductions by a major retailer in the same period last year.

· The Nutritional Supplements segment contributed net sales revenue of $38.1 million for the three months of results included in the second quarter of fiscal year 2016, compared to $24.6 million for the two months of results included in the same period last year.

· The Company repurchased 556,591 shares of outstanding common stock on the open market at a total cost of $50.0 million in the second quarter.

· Diluted EPS was $0.84 and adjusted diluted EPS was $1.12 on 29.0 million diluted shares outstanding.

· Adjusted EBITDA increased $4.9 million to $45.1 million.

Second Quarter of Fiscal Year 2016 Consolidated Operating Results

· Net sales revenue increased 15.4% to $369.1 million compared to $319.9 million in the second quarter of fiscal year 2015. Net sales revenue includes one additional month of Nutritional Supplements results compared to the same period last year, and three months of operations of the VapoSteam business, which was acquired on March 31, 2015. Core business net sales revenue increased $34.9 million, or 10.9%. Foreign currency fluctuations negatively impacted consolidated U.S. Dollar reported net sales revenue by $8.6 million, or 2.7%, year-over-year.

· Gross profit margin decreased 1.7 percentage points to 40.1% compared to 41.8% for the same period last year. The decrease in consolidated gross profit margin is primarily due to the unfavorable impact of foreign currency fluctuations and a lower margin product and channel sales mix, partially offset by the favorable incremental impact of the Nutritional Supplements segment.

· SG&A was 31.3% of net sales compared to 34.1% of net sales for the same period last year. The decrease is primarily due to operating leverage on higher net sales revenue, partially offset by a higher relative SG&A ratio in the Nutritional Supplements segment, higher compensation expense and investments in advertising, marketing and product development.

· Operating income was $32.4 million compared to $24.6 million for the same period last year.

· Income tax expense as a percentage of pretax income was 18.2% compared to 9.0% 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 and the comparative impact of a tax benefit of $2.1 million recorded in the same period last year related to the resolution of an uncertain tax position with a foreign tax authority.

· Net income was $24.5 million, or $0.84 per diluted share on 29.0 million weighted average diluted shares outstanding. This compares to net income in the second quarter of fiscal year 2015 of $18.8 million, or $0.65 per diluted share on 28.8 million weighted average diluted shares outstanding.

· Adjusted EBITDA (EBITDA excluding non-cash asset impairment charges, acquisition-related expenses, and non-cash share-based compensation, as applicable) was $45.1 million compared to $40.2 million in the same period last year.

On an adjusted basis for the second quarter of fiscal years 2016 and 2015, excluding non-cash amortization of intangible assets, acquisition-related expenses, and non-cash share based compensation, as applicable:

· Adjusted operating income was $41.5 million compared to $36.4 million for the second quarter of fiscal year 2015.

· Adjusted income was $32.3 million, or $1.12 per diluted share, compared to $28.5 million, or $0.99 per diluted share, for the second quarter of fiscal year 2015.

First Six Months of Fiscal Year 2016 Consolidated Operating Results

· Net sales revenue increased 13.1% to $714.5 million compared to $631.7 million in the first six months of fiscal year 2015. Net sales revenue includes four additional months of Nutritional Supplements results compared to the same period last year and five months of results from the VapoSteam business, which was acquired on March 31, 2015. Core business net sales revenue increased $28.4 million, or 4.5%. Foreign currency fluctuations negatively impacted consolidated U.S. Dollar reported net sales revenue by $16.4 million, or 2.6%, year-over-year.

· Gross profit margin increased 0.7 percentage points to 40.8% compared to 40.1% for the same period last year. The increase in consolidated gross profit margin is primarily due to the favorable incremental impact of the Nutritional Supplements segment, partially offset by the unfavorable impact of foreign currency fluctuations and a lower margin product and channel sales mix.

· SG&A was 32.1% of net sales compared to 31.1% of net sales for the same period last year. The addition of the Nutritional Supplements and VapoSteam acquisitions increased the SG&A ratio by 1.0 percentage point in the first six months of the fiscal year 2016 compared to the prior year period.

· Operating income was $59.0 million compared to $47.7 million for the same period last year. Operating income for the first six months of fiscal year 2016 includes non-cash asset impairment charges of $3.0 million, compared to $9.0 million for the same period last year.

· Income tax expense as a percentage of pretax income was 16.4% compared to 12.9% 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 and the comparative impact of a tax benefit of $2.1 million recorded in the same period last year related to the resolution of an uncertain tax position with a foreign tax authority.

· Net income was $44.9 million, or $1.54 per diluted share on 29.0 million weighted average diluted shares outstanding. This compares to net income in the first six months of fiscal year 2015 of $35.2 million, or $1.21 per diluted share on 29.2 million weighted average diluted shares outstanding. Net income for the first six months of fiscal year 2016 includes after-tax non-cash asset impairment charges of $2.7 million, compared to $8.2 million for the same period last year.

· Adjusted EBITDA (EBITDA excluding non-cash asset impairment charges, acquisition-related expenses, and non-cash share-based compensation, as applicable) was $87.2 million compared to $82.2 million in the same period last year.

On an adjusted basis for the first six months of fiscal years 2016 and 2015, excluding non-cash asset impairment charges, non-cash amortization of intangible assets, acquisition-related expenses, and non-cash share based compensation, as applicable:

· Adjusted operating income was $79.9 million compared to $75.1 million for the first six months of fiscal year 2015.

· Adjusted income was $63.0 million, or $2.17 per diluted share, compared to $59.3 million, or $2.03 per diluted share, for the first six months of fiscal year 2015.

Balance Sheet Highlights

· Cash and cash equivalents totaled $19.4 million at August 31, 2015, compared to $24.7 million at August 31, 2014.

· Total short- and long-term debt decreased to $479.3 million at August 31, 2015, compared to $604.6 million at August 31, 2014, a net reduction of $125.3 million after making the VapoSteam acquisition for $42.8 million in March 2015 and share repurchases of $50.0 million in August 2015.

· Accounts receivable turnover was 55.7 days at August 31, 2015, compared to 63.8 days at August 31, 2014.

· Inventory was $348.5 million at August 31, 2015, compared to $351.8 million at August 31, 2014.

Share Repurchases

During the fiscal quarter ended August 31, 2015, the Company repurchased 556,591 shares of outstanding common stock on the open market at a total cost of $50.0 million, primarily funded with borrowings under its revolving credit facility.

Fiscal Year 2016 Annual Outlook

For fiscal year 2016, the Company now expects consolidated net sales revenue in the range of $1.500 to $1.536 billion and diluted EPS (GAAP) in the range of $4.43 to $4.73. The Company now expects consolidated adjusted diluted EPS (non-GAAP) to be in the range of $5.50 to $5.85, which excludes after-tax non-cash asset impairment charges, non-cash share-based compensation expense and intangible asset amortization expense.

The Company’s fiscal year 2016 outlook assumes current foreign currency exchange rates for the remainder of the fiscal year. The diluted EPS outlook is based on an estimated weighted average shares outstanding of 28.8 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, future asset impairment charges, future foreign currency fluctuations, including any potential currency devaluation in Venezuela, or further share repurchases are unknown and cannot be reasonably estimated; therefore, they are not included in the Company’s sales and earnings outlook.

As previously disclosed, 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, Thursday, October 8, 2015. Institutional investors and analysts interested in participating in the call are invited to dial (888) 471-3843 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 October 8, 2015 until 11:59 p.m. Eastern Time on October 15, 2015 and

can be accessed by dialing (877) 870-5176 and entering replay pin number 311918. 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 Beauty: 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 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”) (1)

(Unaudited)

(in thousands, except per share data)

	Three Months Ended August 31,
	2015													2014
	As Reported (GAAP)					Adjustments			Adjusted (non-GAAP)					As Reported (GAAP)					Adjustments			Adjusted (non-GAAP)
Sales revenue, net	$	369,129		100.0	%	$	—		$	369,129		100.0	%	$	319,949		100.0	%	$	—		$	319,949		100.0	%
Cost of goods sold	221,124			59.9	%	—			221,124			59.9	%	186,205			58.2	%	—			186,205			58.2	%
Gross profit	148,005			40.1	%	—			148,005			40.1	%	133,744			41.8	%	—			133,744			41.8	%

Selling, general, and administrative expense	115,573			31.3	%	(1,877		)(2)	106,488			28.8	%	109,141			34.1	%	(1,917		)(2)	97,298			30.4	%
						(7,208		)(3)											(6,315		)(3)
						—													(3,611		)(4)
Asset impairment charges	—			—	%	—			—			—	%	—			—	%	—			—			—	%
Operating income	32,432			8.8	%	9,085			41,517			11.2	%	24,603			7.7	%	11,843			36,446			11.4	%

Nonoperating income (expense), net	(46		)	—	%	—			(46		)	—	%	97			—	%	—			97			—	%
Interest expense	(2,503		)	(0.7	)%	—			(2,503		)	(0.7	)%	(3,998		)	(1.2	)%	—			(3,998		)	(1.2	)%
Total other expense	(2,549		)	(0.7	)%	—			(2,549		)	(0.7	)%	(3,901		)	(1.2	)%	—			(3,901		)	(1.2	)%
Income before income taxes	29,883			8.1	%	9,085			38,968			10.6	%	20,702			6.5	%	11,843			32,545			10.2	%

Income tax expense	5,431			1.5	%	1,204		(6)	6,635			1.8	%	1,863			0.6	%	2,134		(6)	3,997			1.2	%
Net income	$	24,452		6.6	%	$	7,881		$	32,333		8.8	%	$	18,839		5.9	%	$	9,709		$	28,548		8.9	%

Diluted EPS	$	0.84				$	0.28		$	1.12				$	0.65				$	0.34		$	0.99

Weighted average shares of common stock used in computing diluted EPS	28,986					—			28,986					28,769					—			28,769

	Six Months Ended August 31,
	2015													2014
	As Reported (GAAP)					Adjustments			Adjusted (non-GAAP)					As Reported (GAAP)					Adjustments			Adjusted (non-GAAP)
Sales revenue, net	$	714,474		100.0	%	$	—		$	714,474		100.0	%	$	631,727		100.0	%	$	—		$	631,727		100.0	%
Cost of goods sold	423,150			59.2	%	—			423,150			59.2	%	378,463			59.9	%	—			378,463			59.9	%
Gross profit	291,324			40.8	%	—			291,324			40.8	%	253,264			40.1	%	—			253,264			40.1	%

Selling, general, and administrative expense	229,349			32.1	%	(3,938		)(2)	211,389			29.6	%	196,538			31.1	%	(3,212		)(2)	178,141			28.2	%
						(14,022		)(3)											(11,574		)(3)
						—													(3,611		)(4)
Asset impairment charges	3,000			0.4	%	(3,000		)(5)	—			—	%	9,000			1.4	%	(9,000		)(5)	—			—	%
Operating income	58,975			8.3	%	20,960			79,935			11.2	%	47,726			7.6	%	27,397			75,123			11.9	%

Nonoperating income, net	91			—	%	—			91			—	%	147			—	%	—			147			—	%
Interest expense	(5,394		)	(0.8	)%	—			(5,394		)	(0.8	)%	(7,415		)	(1.2	)%	—			(7,415		)	(1.2	)%
Total other expense	(5,303		)	(0.7	)%	—			(5,303		)	(0.7	)%	(7,268		)	(1.2	)%	—			(7,268		)	(1.2	)%
Income before income taxes	53,672			7.5	%	20,960			74,632			10.4	%	40,458			6.4	%	27,397			67,855			10.7	%

Income tax expense	8,810			1.2	%	2,787		(6)	11,597			1.6	%	5,221			0.8	%	3,323		(6)	8,544			1.4	%
Net income	$	44,862		6.3	%	$	18,173		$	63,035		8.8	%	$	35,237		5.6	%	$	24,074		$	59,311		9.4	%

Diluted EPS	$	1.54				$	0.63		$	2.17				$	1.21				$	0.82		$	2.03

Weighted average shares of common stock used in computing diluted EPS	29,037					—			29,037					29,192					—			29,192

HELEN OF TROY LIMITED AND SUBSIDIARIES

Net Sales Revenue by Segment (7)

(Unaudited)

(in thousands)

	Three Months Ended August 31,								% of Sales Revenue, net
	2015		2014		$ Change		% Change		2015		2014
Sales revenue by segment, net
Housewares	$	78,848	$	69,637	$	9,211	13.2	%	21.4	%	21.8	%
Healthcare / Home Environment	143,254		126,218		17,036		13.5	%	38.8	%	39.4	%
Nutritional Supplements	38,048		24,634		13,414		54.5	%	10.3	%	7.7	%
Beauty	108,979		99,460		9,519		9.6	%	29.5	%	31.1	%
Total sales revenue, net	$	369,129	$	319,949	$	49,180	15.4	%	100.0	%	100.0	%

	Six Months Ended August 31,								% of Sales Revenue, net
	2015		2014		$ Change		% Change		2015		2014
Sales revenue by segment, net
Housewares	$	144,034	$	136,393	$	7,641	5.6	%	20.2	%	21.6	%
Healthcare / Home Environment	286,296		268,707		17,589		6.5	%	40.1	%	42.5	%
Nutritional Supplements	77,488		24,634		52,854		*		10.8	%	3.9	%
Beauty	206,656		201,993		4,663		2.3	%	28.9	%	32.0	%
Total sales revenue, net	$	714,474	$	631,727	$	82,747	13.1	%	100.0	%	100.0	%

* Calculation is not meaningful or comparable

HELEN OF TROY LIMITED AND SUBSIDIARIES

Selected Consolidated Balance Sheet, Cash Flow and Liquidity Information

(Unaudited)

(in thousands)

	August 31,
	2015		2014
Balance Sheet:
Cash and cash equivalents	$	19,405	$	24,726
Receivables, net	227,147		217,066
Inventory, net	348,463		351,823
Total assets, current	633,929		635,081
Total assets	1,746,986		1,740,985
Total liabilities, current	311,066		769,021
Total long-term liabilities	524,654		170,154
Total debt	479,307		604,607
Stockholders’ equity	911,266		801,810

Cash Flow:
Depreciation and amortization	$	21,227	$	18,493
Net cash provided by operating activities	51,618		17,995
Capital and intangible asset expenditures	5,946		3,688
Payments to acquire businesses, net of cash received	42,750		195,943
Net amounts borrowed	46,100		412,000

Liquidity:
Working Capital	$	322,863	$	(133,940	)

SELECTED OTHER DATA

Reconciliation of Non-GAAP Financial Measures - EBITDA
(Earnings Before Interest, Taxes, Depreciation and Amortization) and Adjusted EBITDA (1)

(Unaudited)

(in thousands)

	Three Months Ended August 31,				Six Months Ended August 31,
	2015		2014		2015		2014
Net income	$	24,452	$	18,839	$	44,862	$	35,237

Interest expense, net	2,495		3,986		5,368		7,382

Income tax expense	5,431		1,863		8,810		5,221

Depreciation and amortization, excluding amortized interest	10,873		9,993		21,227		18,493

EBITDA (Earnings before interest, taxes, depreciation and amortization)	$	43,251	$	34,681	$	80,267	$	66,333

Adjusted EBITDA:

EBITDA, as calculated above	$	43,251	$	34,681	$	80,267	$	66,333

Non-cash share-based compensation (2)	1,877		1,917		3,938		3,212

Acquisition-related expenses (4)	—		3,611		—		3,611

Non-cash asset impairment charges (5)	—		—		3,000		9,000

Adjusted EBITDA	$	45,128	$	40,209	$	87,205	$	82,156

SELECTED OTHER DATA

Reconciliation of Non-GAAP Financial Measures - EBITDA
(Earnings Before Interest, Taxes, Depreciation and Amortization) and Adjusted EBITDA by Segment (1) (7)

(Unaudited)

(in thousands)

	Three Months Ended August 31, 2015
	Housewares		Healthcare / Home Environment		Nutritional Supplements		Beauty			Total
Operating Income	$	15,142	$	4,808	$	2,969	$	9,513		$	32,432

Depreciation and amortization, excluding amortized interest	1,075		5,514		1,965		2,319			10,873

Other income / (expense)	—		—		—		(54		)	(54		)

EBITDA (Earnings before interest, taxes, depreciation and amortization)	$	16,217	$	10,322	$	4,934	$	11,778		$	43,251

Adjusted EBITDA:

EBITDA, as calculated above	$	16,217	$	10,322	$	4,934	$	11,778		$	43,251

Add: Non-cash share-based compensation (2)	325		533		273		746			1,877

Acquisition-related expenses (4)	—		—		—		—			—

Non-cash asset impairment charges (5)	—		—		—		—			—

Adjusted EBITDA	$	16,542	$	10,855	$	5,207	$	12,524		$	45,128

	Three Months Ended August 31, 2014
	Housewares		Healthcare / Home Environment		Nutritional Supplements		Beauty		Total
Operating Income	$	13,891	$	4,508	$	110	$	6,094	$	24,603

Depreciation and amortization, excluding amortized interest	889		5,027		1,359		2,718		9,993

Other income / (expense)	—		—		—		85		85

EBITDA (Earnings before interest, taxes, depreciation and amortization)	$	14,780	$	9,535	$	1,469	$	8,897	$	34,681

Adjusted EBITDA:

EBITDA, as calculated above	$	14,780	$	9,535	$	1,469	$	8,897	$	34,681

Add: Non-cash share-based compensation (2)	260		81		—		1,576		1,917

Acquisition-related expenses (4)	—		—		3,611		—		3,611

Non-cash asset impairment charges (5)	—		—		—		—		—

Adjusted EBITDA	$	15,040	$	9,616	$	5,080	$	10,473	$	40,209

SELECTED OTHER DATA

Reconciliation of Non-GAAP Financial Measures - EBITDA
(Earnings Before Interest, Taxes, Depreciation and Amortization) and Adjusted EBITDA by Segment (1) (7)

(Unaudited)

(in thousands)

	Six Months Ended August 31, 2015
	Housewares		Healthcare / Home Environment		Nutritional Supplements		Beauty		Total
Operating income	$	26,325	$	13,226	$	5,589	$	13,835	$	58,975

Depreciation and amortization, excluding amortized interest	2,083		10,577		3,933		4,634		21,227

Other income / (expense)	—		—		—		65		65

EBITDA (Earnings before interest, taxes, depreciation and amortization)	$	28,408	$	23,803	$	9,522	$	18,534	$	80,267

Adjusted EBITDA:

EBITDA, as calculated above	$	28,408	$	23,803	$	9,522	$	18,534	$	80,267

Add: Non-cash share-based compensation (2)	631		1,128		576		1,603		3,938

Acquisition-related expenses (4)	—		—		—		—		—

Non-cash asset impairment charges (5)	—		—		—		3,000		3,000

Adjusted EBITDA	$	29,039	$	24,931	$	10,098	$	23,137	$	87,205

	Six Months Ended August 31, 2014
	Housewares		Healthcare / Home Environment		Nutritional Supplements		Beauty		Total
Operating income	$	26,926	$	13,225	$	110	$	7,465	$	47,726

Depreciation and amortization, excluding amortized interest	1,777		10,259		1,359		5,098		18,493

Other income / (expense)	—		—		—		114		114

EBITDA (Earnings before interest, taxes, depreciation and amortization)	$	28,703	$	23,484	$	1,469	$	12,677	$	66,333

Adjusted EBITDA:

EBITDA, as calculated above	$	28,703	$	23,484	$	1,469	$	12,677	$	66,333

Add: Non-cash share-based compensation (2)	534		662		—		2,016		3,212

Acquisition-related expenses (4)	—		—		3,611		—		3,611

Non-cash asset impairment charges (5)	—		—		—		9,000		9,000

Adjusted EBITDA	$	29,237	$	24,146	$	5,080	$	23,693	$	82,156

HELEN OF TROY LIMITED AND SUBSIDIARIES

Reconciliation of GAAP Net Income and Earnings Per Share (EPS) to Adjusted Income and Adjusted EPS (non-GAAP) (1) (7)

(dollars in thousands, except per share data)

(Unaudited)

	Three Months Ended August 31,				Basic EPS				Diluted EPS
	2015		2014		2015		2014		2015		2014
Net income as reported (GAAP)	$	24,452	$	18,839	$	0.86	$	0.66	$	0.84	$	0.65
Acquisition-related expenses, net of tax (4)	—		2,306		—		0.08		—		0.08
Subtotal	24,452		21,145		0.86		0.75		0.84		0.73
Non-cash share-based compensation, net of tax (2)	1,603		1,671		0.06		0.06		0.06		0.06
Amortization of intangible assets, net of tax (3)	6,278		5,732		0.22		0.20		0.22		0.20
Adjusted income (non-GAAP)	$	32,333	$	28,548	$	1.14	$	1.00	$	1.12	$	0.99

Weighted average shares of common stock used in computing basic and diluted earnings per share (GAAP)					28,435		28,372		28,986		28,769

	Six Months Ended August 31,				Basic EPS				Diluted EPS
	2015		2014		2015		2014		2015		2014
Net income as reported (GAAP)	$	44,862	$	35,237	$	1.58	$	1.23	$	1.54	$	1.21
Acquisition-related expenses, net of tax (4)	—		2,306		—		0.08		—		0.08
Asset impairment charges, net of tax (5)	2,656		8,155		0.09		0.28		0.09		0.28
Subtotal	47,518		45,698		1.67		1.59		1.64		1.57
Non-cash share-based compensation, net of tax (2)	3,345		2,839		0.12		0.10		0.12		0.10
Amortization of intangible assets, net of tax (3)	12,172		10,774		0.43		0.37		0.42		0.37
Adjusted income (non-GAAP)	$	63,035	$	59,311	$	2.21	$	2.06	$	2.17	$	2.03

Weighted average shares of common stock used in computing basic and diluted earnings per share (non-GAAP)					28,478		28,738		29,037		29,192

HELEN OF TROY LIMITED AND SUBSIDIARIES

Reconciliation of Fiscal Year 2016 GAAP Outlook for GAAP Diluted Earnings Per Share (EPS)

to Adjusted Diluted EPS (non-GAAP) (1) (8)

(Unaudited)

	Fiscal Year Ended February 29, 2016
	Period Ended August 31, 2015 (Six Months)		Outlook for the Balance of the Fiscal Year (Six Months)					Outlook for the Fiscal Year (Twelve Months)
Diluted EPS, as reported (GAAP)	$	1.54	$	2.80	-	$	3.10	4.34		-	$	4.64
Asset impairment charges, net of tax (5)	0.09		—		-	—		0.09		-	0.09
Subtotal	1.63		2.80		-	3.10		4.43		-	4.73
Non-cash share-based compensation, net of tax (2)	0.12		0.13		-	0.16		0.25		-	0.28
Amortization of intangible assets, net of tax (3)	0.42		0.40		-	0.42		0.82		-	0.84
Adjusted diluted EPS (non-GAAP)	$	2.17	$	3.33	-	$	3.68	$	5.50	-	$	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 Condensed 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 for the three months ended August 31, 2015 and 2014 consist of non-cash share-based compensation expense of $1.88 million ($1.60 million after tax) and $1.92 million ($1.67 million after tax), respectively. Adjustments for the six months ended August 31, 2015 and 2014 consist of non-cash share-based compensation expense of $3.94 million ($3.35 million after tax) and $3.21 million ($2.84 million after tax), respectively. Share-based compensation expense is recognized for share-based awards outstanding under share-based compensation plans.

(3) Adjustments for the three months ended August 31, 2015 and 2014 consist of non-cash intangible asset amortization expense of $7.21 million ($6.28 million after tax) and $6.32 million ($5.73 million after tax), respectively. Adjustments for the six months ended August 31, 2015 and 2014 consist of non-cash intangible asset amortization expense of $14.02 million ($12.17 million after tax) and $11.57 million ($10.77 million after tax), respectively.

(4) 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.

(5) Adjustments for the six months ended August 31, 2015 and 2014 consist of non-cash asset impairment charges of $3.00 million ($2.66 million after tax) and $9.00 million ($8.16 million after tax) recorded 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 Beauty 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.

(6) Total tax effects of adjustments described in Notes 2 through 5, for each of the periods presented:

	Three Months Ended August 31,						Six Months Ended August 31,
	2015			2014			2015			2014
Tax Effects of Adjustments
Non-cash share-based compensation (2)	$	(274	)	$	(246	)	$	(593	)	$	(373	)
Amortization of intangible assets (3)	(930		)	(583		)	(1,850		)	(800		)
Acquisition-related expenses (4)	—			(1,305		)	—			(1,305		)
Asset impairment charges (5)	—			—			(344		)	(845		)
Total	$	(1,204	)	$	(2,134	)	$	(2,787	)	$	(3,323	)

(7) Healthy Directions was acquired on June 30, 2014 and its operations are reported under the Nutritional Supplements segment. Results reported include three- and two- months respectively, and six- and two-months, respectively for the fiscal quarter and year-to-date periods ended August 31, 2015 and 2014.

The VapoSteam business was acquired on March 31, 2015 and its operations are reported under the Healthcare / Home environment segment. Results reported include three- and five- months, respectively, for the fiscal quarter and year-to-date periods ended August 31, 2015.

(8) The diluted EPS outlook is based on an estimated weighted average shares outstanding of 28.8 million for fiscal year 2016.

EXHIBIT 99.2

CORPORATE PARTICIPANTS

Jack Jancin Helen of Troy Limited - IR

Julien Mininberg Helen of Troy Limited - CEO

Brian Grass Helen of Troy Limited - CFO

CONFERENCE CALL PARTICIPANTS

Dan Moore CJS Securities - Analyst

Jason Gere KeyBanc Capital Markets - Analyst

Maria Vizuete Piper Jaffray - Analyst

Frank Camma Sidoti & Company - Analyst

PRESENTATION

Operator

Good day, ladies and gentlemen. Welcome to this Helen of Troy Limited second quarter 2016 earnings call. Today’s conference is being recorded. At this time I would like to turn the call over to Mr. Jack Jancin, Investor Relations. Please go ahead.

Jack Jancin - Helen of Troy Limited - IR

Good afternoon everyone and welcome to Helen of Troy’s second quarter FY16 earnings conference call. The agenda for the call this afternoon is as follows. I will begin with a brief discussion of forward-looking statements. Mr. Julien Mininberg, the Company’s CEO, will comment on the financial performance and key accomplishments of the quarter and then update you on areas of focus for FY16. Then Mr. Brian Grass, the Company’s CFO, will review the financials in more detail and comment on the Company’s outlook for FY16. Following this, Mr. Mininberg and Mr. Grass will take questions you have for us today.

Before reviewing our Safe Harbor statements, I’d like to let you all know that we will be webcasting our presentations at the Morgan Stanley Global Consumer and Retail Conference on November 18, and the Goldman Sachs US Emerging and SMID Cap Growth Conference on November 19, both in New York. Webcast links will be posted to the Helen of Troy Investor Relations website.

This conference call may contain certain forward-looking statements that are based on Management’s current expectation with respect to future events or financial performance. Generally, the words “anticipates, believes, expects” and other similar words identifying forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties that could cause anticipated results to differ materially from actual results.

This conference call may also include information that may be considered non-GAAP financial information. These non-GAAP measures are not an alternative to GAAP financial information and may be calculated differently than the non-GAAP financial information disclosed by other companies. The Company cautions listeners not to place undue reliance on forward-looking statements or non-GAAP information.

Before I turn the conference call over to Mr. Mininberg, I’d like to inform all interested parties that a copy of today’s earnings release has been posted to the Company’s website at www.hotus.com. The earnings release contains tables that reconcile non-GAAP information and financial measures to their corresponding GAAP-based measures. The release can be obtained by selecting the Investor Relations tab on the Company’s homepage and then the News tab. I will now turn the conference call over to Mr. Mininberg.

Julien Mininberg - Helen of Troy Limited - CEO

Thank you, Jack. Good afternoon everyone. We had a strong second quarter; revenue growing double digit. All four business units at Helen of Troy grew in the quarter. I’d like to start off my comments on the business segments by saying that Beauty grew in the second quarter. In recent quarters, the trend in Beauty has been improving. I’m pleased that the efforts to improve our fundamentals and new products for this segment are starting to flow, building on the strength in the past several quarters in foot care.

While encouraging, I would like to remind you that the second quarter last year was negatively impacted with inventory reductions by a major retailer, not repeated this year, making for a somewhat easier comparison. While we’re certainly pleased with the progress made over the past several quarters in Beauty, we do not expect meaningful sales growth in the full FY16. This second quarter’s growth was led by our Healthcare and Home Environment, and also our Housewares segments, both growing double digits. Our Nutritional Supplements segment also contributed $38.1 million in the second quarter.

With capital allocation representing a key component of our strategic plan, we returned capital to shareholders by repurchasing stock in the second quarter which I will discuss in more detail shortly.

We are pleased with our first half performance in which the Company grew revenues double digits despite foreign currency headwinds. Looking forward to the balance of the fiscal year, we expect to continue our progress and we are raising the lower end of our outlook range to reflect our results to date and our expectations for the remainder of the year.

Stepping back from our financial performance, we continue to make meaningful progress on executing the seven key strategic priorities that guide our multi-year transformation. Today, I’d like to update you on each of them briefly.

The first strategy is to invest in our core. As previously discussed, we have been investing in marketing support behind our major brands and product launches in core categories. Examples include thermometers, humidifiers, air and water purifiers and our largest Personal Care brands, as well as new products in Beauty and in Housewares. We have also been investing in marketing support for our Nutritional Supplements business, including increased online customer acquisition. We’re pleased to see these investments contributing to growth.

The second strategy involves strategic disciplined mergers and acquisitions. In the first half of the year, we closed the Vicks inhalant transaction as previously discussed. We will continue to build upon our track record of accretive acquisitions as we’re constantly looking at opportunities to expand in categories and geographies where we believe we can develop leadership market positions and carve out a competitive advantage.

The third strategy is focusing on consumer-centric innovation. We’ve talked in the past about our increased focus on innovation based on in-depth customer, consumer and competitive understanding, especially in Beauty. Now a few quarters later, we’re pleased to report that we’ve launched innovative new Beauty appliances in both our Retail and our Professional Appliance businesses. Stylists told us that longer appliances would make a difference, so under our award-winning Hot Tools professional brand, we launched extra long versions of our straighteners and curling irons.

In Retail Appliances, our new Revlon One-Step Hair Dryer and Styler was inspired by consumers searching for convenience. It started shipping to major retailers in the second quarter and initial results are encouraging. We also relaunched our Pro Beauty Tools brand in Retail Appliances starting with new dryers and new packaging appealing to consumers’ demand for professional-grade products at retail.

OXO continued to build within its existing categories. A nice example this quarter is OXO’s Hand-Held Spiralizer for fruits and vegetables which is selling especially well. OXO is also entering new categories such as small kitchen electrics with the OXO On appliances that began shipping in September.

Our Nutritional Supplements segment is also innovating, introducing multiple new products including launches under all three of its best-selling doctors in the second quarter. These include ProMED Whole Body Inflammatory Response supplements under Dr. Sinatra, Mind & Memory Essentials under Dr. Whitaker and Probiotic Advantage Bifido Beadlets under Dr. Williams.

The fourth is to update our organization and people systems. With our new Global Human Resources Vice President now on board, we have conducted our second global summit in this critical area kicking off a number of key initiatives around people systems.

The fifth is to develop best-in-class shared services. Leveraging the new leadership and best practices we now have in place, we are driving improved warehouse efficiency and inventory management. We have now completed the warehouse consolidation for Healthy Directions which was one of our committed cost savings initiatives. This brings more sophisticated direct to consumer fulfillment capabilities in-house. This project was heavily supported by our information technology department as well, which, under our new Chief Information Officer, is now focused on enabling additional best-in-class supply chain practices. I’m particularly pleased to see increased benefits continuing to flow from collaboration under our new shared services structure. A recent example is the reapplication of Helen of Troy’s decades long electrical appliance expertise to our Housewares segment for the launch of the new OXO On appliances.

The sixth area is to attack waste. Our fuel for growth initiative is progressing well. We have reinvested the $4 million of savings identified for FY16 to grow our core and to offset margin compression from foreign exchange. We have also progressed well on the meaningful SKU count reduction in our Beauty business across multiple regions to go-to-market with the a more efficient assortment and to improve our inventory turns.

And the seventh is to improve asset efficiency and maintain our shareholder friendly policies. We are diligently focused on maintaining a strong balance sheet. Our inventory has decreased slightly, even as we reported double-digit revenue growth during the first half of FY16, resulting in improved turns. We will continue to use the strong cash flow generation of our business and the financial flexibility of our balance sheet to invest in our core business first, then search for accretive acquisitions and then consider return of capital to shareholders.

With capital allocation representing a key component of our strategic plan, we returned capital to shareholders by repurchasing $50 million of our common stock on the open market in the second quarter. Since the second quarter of last year we have invested $92.8 million in acquisition and share repurchase while reducing our total debt by $125.3 million. We will also continue to proactively engage with investors and analysts and plan to attend upcoming investor conferences in New York, as Jack previously mentioned. We look forward to speaking with many of you at these events.

In summary, I continue to be very pleased with the strong work of Helen of Troy employees worldwide who are embracing and implementing these strategies and our new culture with diligence and zeal. Their work is paying dividends and helping put the Company on a path to deliver our targets and build our capabilities for the future. We expect continued progress in the second half of the fiscal year. And with that, I’d like to turn the call over to Brian Grass who will further discuss our results and our outlook.

Brian Grass - Helen of Troy Limited - CFO

Thank you, Julien. Good afternoon everyone. I’d like to start by highlighting the impact that foreign currency had on our results for the second quarter given the significant impact it began to have at the close of FY15 and the expected impact for the full FY16.

Foreign currency exchange rate fluctuations reduced our reported net sales revenue by approximately $8.6 million or 2.7% year-over-year. The impact was slightly worse than the expectations that were assumed in our FY16 outlook due to further weakening of the average euro, Canadian and Mexican peso exchange rates during the second quarter. As a reminder, a rule of thumb to use when thinking about the impact of foreign currency on our results is that for every $1 of fluctuation in net sales, as much as $0.60 to $0.70 can fall to operating income depending on the mix of currencies and their relative volatility against the US dollar.

Now moving on to my discussion. Overall results were slightly ahead of our expectations despite a slightly worse than expected drag from foreign currency. Successful new product introductions, strong point of sale activity at retail and strong sell-through of seasonal products were the primary drivers of our sales performance. As a reminder, our results for the second quarter of last year included the negative impact of inventory reductions by a major retailer making for a somewhat easier year-over-year comparison.

Consolidated sales revenue was $369.1 million for the quarter, a 15.4% increase over the prior year period, which includes an increase in our core business of $34.9 million or 10.9%. The increase in core business sales revenue includes a negative impact of $8.6 million or 2.7% from the foreign currency fluctuations referred to previously. As Julien touched on, our Healthcare/Home Environment segment achieved growth of 13.5% despite a foreign currency headwind of $5.7 million or 4.5%.

The Housewares segment increased 13.2% and benefited from new product introductions and strong point of sale activity. Healthy Directions contributed $38.1 million in sales for the three months of operating results included in the second quarter of FY16 compared to $24.6 million for the two months of results included in the same period last year. The Beauty segment achieved a sales increase of 9.6% in the quarter despite a foreign currency headwind of $2.6 million or 2.6% and benefited from new distribution in foot care, new product introductions and the resolution of the west coast port disruption that pushed sales from the first quarter of FY16 into the second quarter.

Consolidated gross profit was 40.1% of net sales compared to 41.8% of net sales in the second quarter of FY15. The decline was primarily due to the negative impact of foreign currency fluctuations and a lower margin sales mix partially offset by the favorable impact of an incremental month of Nutritional Supplements results.

SG&A was 31.3% of net sales compared to 34.1% of net sales for the same period last year. The decrease was primarily due to operating leverage on higher net sales revenue partially offset by the impact of one additional month of Nutritional Supplements results which operates with a higher relative SG&A ratio because it’s a direct to consumer business.

Operating income was $32.4 million compared to $24.6 million in the same period last year. Adjusted operating income excluding non-cash in tangible asset amortization expense, acquisition related expenses and non-cash share-based compensation, as applicable, was $41.5 million compared to $36.5 million in the same period last year, representing a 13.9% increase. Adjusted operating margin was 11.2% compared to 11.4% in the same period last year primarily reflecting the drag from foreign currency, a lower margin sales mix and investments in product development and advertising.

Income tax expense as a percentage of pretax income was 18.2% compared to 9% 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 and the comparative impact of a tax benefit of $2.07 million recorded in the same period last year. We continue to expect our effective tax rate to range between 14% and 16% for the full FY16.

Net income was $24.5 million or $0.84 per diluted share on 29 million weighted average diluted shares outstanding. This compares to net income in the second quarter of FY15 of $18.8 million or $0.65 per diluted share on 28.8 million shares. Adjusted income was $32.3 million or $1.12 per diluted share compared to $28.5 million or $0.99 per diluted share for the second quarter of FY15.

Now moving on to our financial position. At August 31, 2015, accounts receivable was $227.1 million compared to $217.1 million at the same time last year. Receivable turnover was 55.7 days compared to 63.8 days at the same time last year reflecting the favorable impact of Healthy Directions which collects the majority of its revenue before the product is shipped to the customer.

Inventory decreased slightly to $348.5 million compared to $351.8 million at the same time last year. Inventory decreased $3.3 million despite sales growth of 13.1% for the six months ended August 31, 2015. Inventory turnover improved to 2.8 times compared to 2.6 times for the same period last year.

Total short and long-term debt decreased to $479.3 million at August 31, 2015, compared to $604.6 million at August 31, 2014, a net reduction of $125.3 million after funding the VapoSteam acquisition for $42.8 million in March 2015 and share repurchases of $50 million in August 2015. We ended the second quarter with a leverage ratio of 2.11 times compared to 2.93 times at the end of the second quarter of FY15.

Now, I’d like to turn to our outlook for FY16. Please note that we have provided a reconciliation of FY16 projected GAAP diluted EPS to non-GAAP adjusted diluted EPS in our earnings release issued this afternoon. The discussed results for the second quarter of the fiscal year were slightly ahead of our expectations and we are revising the bottom end of our outlook range for the full FY16. We now expect consolidated net sales revenue in the range of $1.5 billion to $1.536 billion and GAAP diluted EPS in the range of $4.43 to $4 73.

On a segment basis for FY16, we continue to expect sales growth for Housewares and Healthy Directions in the mid-single digits and for Healthcare/Home Environment in the low single digits. For Beauty, we now expect to see a sales decline in the low single digits compared to our prior expectation of low to mid-single digits.

We now expect consolidated non-GAAP adjusted diluted EPS to be in the range of $5.50 to $5.85 which excludes after tax non-cash asset impairment charges, non-cash share-based compensation expense and intangible asset amortization expense. Our FY16 outlook assumes foreign currency exchange rates for the balance of the fiscal year will remain at current levels. As mentioned, we continue to expect our FY16 effective tax rate to range between 14% and 16% for the full year.

The diluted EPS outlook is based on an estimated weighted average shares outstanding of 28.8 million for the full FY16. Further, our outlook assumes that the severity of the cold flu season will be in line with historical averages. As a reminder, the prior year cold flu season was above average. Our outlook also reflects our cautious view on retail inventory levels, upward pressure on hourly wages, foreign currency and the global economic environment.

The likelihood and potential impact of any FY16 acquisitions other than VapoSteam, further 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 our sales and earnings outlook.

As a reminder, in FY15, the Company benefited 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 FY16. These items negatively impact the year-over-year comparison of adjusted diluted EPS by a combined $0.44. As mentioned previously, the year-over-year comparison is also negatively impacted by the estimated foreign currency impact of $0.59 in FY16. And now, I would like to turn the call back over to Julien for some closing remarks.

Julien Mininberg - Helen of Troy Limited - CEO

Thank you, Brian. Overall, a good first half for the year. We continue to make good progress executing our multi-year transformation strategy to grow the business, to improve the organization and also the culture. We remain focused on and investing in product innovation, brand marketing and talent development. We feel confident in our outlook for the second half of the fiscal year and believe we are well-positioned for the longer-term. With that, I’d like to turn the call over to the operator to begin the question-and-answer session.

QUESTION AND ANSWER

Operator

(Operator Instructions)

Bob Labick, CJS Securities

Dan Moore - CJS Securities - Analyst

Good afternoon. This is actually Dan Moore sitting in for Bob.

Julien Mininberg - Helen of Troy Limited - CEO

Hello, Dan.

Dan Moore - CJS Securities - Analyst

Thanks for taking the questions. I wanted to focus on Beauty a little bit. Obviously some improvement. Maybe just drill down or touch a bit on product launches and new product innovation. Specifically, how is the pipeline and any detail or color you might be able to give on timing of new products would be very helpful.

Julien Mininberg - Helen of Troy Limited - CEO

Sure. Great question and nice to talk to you Dan. I know Bob’s not able to join today. So thank you. In terms of Beauty, it starts a couple of quarters ago. You probably remember, and others on the call, that we said we would need some time to first get in touch with consumers a bit more, develop several consumer insights, new products, et cetera. And that pipeline we said at the time would take 12 to 18 months. It turns out we were able to go a little faster on the product that you heard about, and one or two already in the works, so we were able to come out a little sooner.

As far as the pipeline is concerned, we’re pleased that we have a multi-year plan for Beauty of innovation and that said, it’s not all dialed in yet. It’s not fully locked and there’s lots of testing going on. As part of increasing the rigor and fixing the fundamentals in Beauty, we’ve put a much more disciplined process for new product

development in place. And that A, takes a bit more time and B, weeds out a number of products that might have been launched in the past but probably would not have had good results.

And so, while we are pleased with what we have in the pipeline, we do want more. We are working on more and we’re very selective about what we will bring to market. Obviously, I’m not in a position to tip off to our competition exactly what we will launch, when it will be and what form and market and channel and all of that, let alone price points and features. That kind of detail we would stay away from. I’d also like to say that the foot care business is helping us in Beauty because there we’ve had a nice lift for several quarters and that certainly is helping us as we continue to pull the basics together.

Dan Moore - CJS Securities - Analyst

Very helpful. I appreciate it. And maybe just switching gears to Healthy Directions. Talk a little bit about or update us on your customer acquisition strategies. I believe in Q1, you ran promotions that impacted margins a bit. How did those work? Are they sticking? Any color there would be great.

Julien Mininberg - Helen of Troy Limited - CEO

It’s a little too soon to tell and it’s true that we did run a number of promotions. Also some important testing in Healthy Directions in Q1 as we continue to learn our way from the tremendous strength that that business has in direct mail, which is squarely on its target audience which tends to be older. Remember the average age for Healthy Directions is 70 years old. So these are people who are substantial consumers of direct mail. But today’s 60-year-olds are much more digital savvy and they’re tomorrow’s, call it 65-year-olds, and we have a couple of years to do this.

It’s more of a testing regimen. There is some promotional activity as well. The promotions generally did well. Despite my comment, they are too soon to assess. And that said, not all of them pay out perfectly. So we’re culling through that data now and deciding which to expand and which to invest further in and also testing some new ones.

Dan Moore - CJS Securities - Analyst

Great. Lastly, switching to capital allocation. Obviously the new piece of information on the pretty significant buyback, just talk about how you think about balancing pipeline of potential acquisitions versus buybacks. Will it be more opportunistic or should we expect to see more of the same?

Julien Mininberg - Helen of Troy Limited - CEO

On this one, we are careful on this subject. Obviously, not to commit ourselves to a specific buyback at a specific time. We’re in an opportunistic mode in that regard. And the reason for it is because we continue to prefer investing in our core and acquisition. We have a very active acquisition pipeline. There’s always several active ones that we’re looking at. You’ve seen us make the move twice in the last year and a quarter now. And I can say that there’s always several that are a strong interest to us at any one time including now. That said, we’re not prepared to make any announcement or even suggest that we’re close to one. That’s not the case.

Although what we would like to do is to continue to remain flexible with our balance sheet to get that balance right. So as we see opportunity to continue to pay down debt, which is coming from our significant cash flow, and opportunity to return capital to shareholders while still maintaining enough dry powder to go for the higher order of priority of acquisition, we’ll make that move as we see appropriate. That’s what we did this quarter and we’ll retain the ability to continue to do it as if it’s the best lens that I just described.

Operator

Jason Gere, KeyBanc.

Jason Gere - KeyBanc Capital Markets - Analyst

Thanks, nice quarter guys.

Julien Mininberg - Helen of Troy Limited - CEO

Thank you, Jason. Nice to hear from you

Jason Gere - KeyBanc Capital Markets - Analyst

Same here. If we could just maybe continue on the topic of acquisitions. As you think about it and obviously you have the financial flexibility, can you maybe help us prioritize where you would potentially look at acquisitions? Because I see three buckets that are out there. There is one that would leverage the existing brick and mortars portfolio, get a little bit more scale. There’s two, international opportunities that could take some of your stronger brands domestically internationally and get some additional in distribution. And three, maybe levering off of Healthy Directions and the B2C type of capabilities. And all 3 present interesting opportunities. So I was wondering how do you guys internally talk about that? Is one a stronger priority over the other two?

Julien Mininberg - Helen of Troy Limited - CEO

Sure. We have some pretty clear criteria. We shared them in the Investor Day and they’re largely available on our website in a condensed form and so they haven’t changed. We don’t bucket the way you just described, although the logic of what you described makes a ton of sense. We bucket them according to our criteria and then when we look at acquisition we have a fairly different outlook by segment.

As we look at Beauty, it’s different of how we would apply those than Housewares or Nutritional Supplements or the Health and Home area. We also have a lens that we look through for new legs of business that we wouldn’t tuck in to one of the existing but rather bolt on like we have done in the past with the OXO acquisition in Housewares, the Kaz acquisition in Health and Home and recently, the Healthy Directions acquisition in Nutrition. So we’ve done it multiple times in each way.

And as you get specific, I’ll give you an example only, but not to talk through all of them. In Beauty, adjacencies are important to us. Another hair dryer business wouldn’t make as much sense as adding another area of Beauty. I mentioned foot care on the call. That one we happen to do through license, Dr. Scholl’s, and that said, we could certainly add through acquisition and find other ways to grow once the stabilization is done.

That would be very different for example in Health Care/Home Environment where you’ve seen us act, especially around consumables, around tucking into our brands, such as we recently did with Vicks or adding on a new capability that had that consumables cycle like we did with PUR. When it comes to new businesses, there, it’s important that it meets our criteria or we wouldn’t be adding a whole new leg and in this case, you saw us do that with Healthy Directions.

Within Healthy Directions itself, since you asked about it, here that online capability is important to us. So that would be a place that would attract our attention. And then, direct to consumer businesses that fit our consumer acquisition capability, incredible database technology that’s available there and now, our fulfillment ability. Those would be nice things to add into Healthy Directions. So my intention was not to be comprehensive across all the units, but to show you the question you asked which is how do we look at it, what buckets do we use and how do we apply our criteria.

Jason Gere - KeyBanc Capital Markets - Analyst

I appreciate the color there. I guess the second question I was going to ask was just obviously, your results go through the August timeframe and what we’ve been hearing in September was a tougher time for a lot of retailers. So just wondering if there’s any kind of color you can provide on how the environment is right now just in general whether it’s at specialty retail or even at the mass channel? Could anything change from the summer months into September that you can highlight at this point?

Julien Mininberg - Helen of Troy Limited - CEO

Retail is a tricky world. You read the same newspapers we do around retailer one will announce a terrific growth. Like you saw Target is on a roll these days at a macro level. And retailer 2 will announce some struggles like you saw in even Walmart’s most recent announcements. They are all over the map in that regard and you can go right down the line with all the top customers, some of the drug chains, et cetera.

And so, what I would say is that it’s a customer by customer situation. I would also that on a macro level there’s a tremendous amount of caution still out there in the retailer world. There’s also therefore caution around inventory. Some retailers will increase their inventory because they’re gearing up for the holidays and the very next day, perplexingly, another retailer will tell you for some reason that they are taking down inventory even as they themselves prepare for the same holiday season against the same forecast. So it’s a bit of a black box in that regard. And that said, we’re very close to our customers. We talk to them constantly, almost every day, depends on the subject and we know their situation. As they talk to us, we respond.

In the case of the macroenvironment from an economic standpoint, same newspaper, the stock market waits to see what the Fed will do and consumers don’t necessarily respond to that. They respond to things like wages and other things. We’ve seen wage increases at the lowest levels due to initiatives like the one Walmart announced around the hourly wages.

In fact, as we mentioned in our press release, that’s affecting our ability to hire in areas like our warehouse area and we’ve taken up our wages in that regard. It also creates an uncertainty. All that said, those same consumers now have more wage money in their pocket and they go out and spend it. So you see the reason why the answer is not so black and white as we see X or we see Y. We see the same range as you read about in the paper every day.

Jason Gere - KeyBanc Capital Markets - Analyst

Okay. Fair enough. Last question is just a housekeeping. OXO and the Housewares business, could you quantify how much the sell in for OXO On contributed in the quarter?

Brian Grass - Helen of Troy Limited - CFO

Essentially $0. It didn’t start shipping until September.

Jason Gere - KeyBanc Capital Markets - Analyst

Okay. That’s what I thought you said but I wasn’t sure if there was some —

Julien Mininberg - Helen of Troy Limited - CEO

I’m sorry if I was unclear in my remarks but it doesn’t start until September and I would add the Bakeware category into that statement as well. OXO did a wonderful job of launching into its existing businesses. The spiralizer and the example this quarter, the GreenSaver product, an example last quarter, and now expanding into new categories. Pots and Pans we talked about a few quarters ago via license and now OXO On and bakeware direct. But just to be crystal, bakeware and On started shipping in Q3.

Jason Gere - KeyBanc Capital Markets - Analyst

Perfect. Thank you. I’ll pass on to the next caller.

Operator

Stephanie Wissink, Piper Jaffray.

Maria Vizuete - Piper Jaffray - Analyst

Hi it’s actually Maria Vizuete on for Steph. Thanks so much for taking our questions and congrats on a great quarter.

Julien Mininberg - Helen of Troy Limited - CEO

Thank you. Nice to talk to you.

Maria Vizuete - Piper Jaffray - Analyst

Nice to see you. We have a few questions here. First on Healthy Directions, with the performance continuing strong on both group sales and a margin perspective and now that you have the warehouse consolidation behind you, how should we be thinking about margin expansion in the second half?

Brian Grass - Helen of Troy Limited - CFO

I would not assume significant margin expansion. I mean we’re getting cost savings now that they are in our warehouse. But I think on a full-year basis, the cost savings was going to be $1 million and so, we’re only getting half of that in the second half of the year so that we would not expect a meaningful margin expansion.

Julien Mininberg - Helen of Troy Limited - CEO

Remember foreign exchange, which Brian talked a fair amount about, it affects margins a lot. So a revenue dollar in one currency when translates to dollars would affect the gross margin line and depending on our costs as well. Fighting off the foreign exchange with good cash flow and savings and other things is more of a priority for us than margin expansion in the second half.

Brian Grass - Helen of Troy Limited - CFO

And they are working on other cost savings initiatives in that segment but it’s too early to give you any numbers on those.

Maria Vizuete - Piper Jaffray - Analyst

Okay, that’s helpful. Thank you. And then, can you talk more about the Beauty business improvement in the quarter and maybe how much of that came from easier comparison?

Julien Mininberg - Helen of Troy Limited - CEO

You want to talk about the comparison part?

Brian Grass - Helen of Troy Limited - CFO

The comparison, we talked about the inventory reductions last year but we did not give a specific dollar amount. And so, I can’t tell you something specific but I can say it had a meaningful impact (Technical Difficulty).

Operator

Mr. Jancin, this is the operator, we can’t hear you any more.

(Operator Instructions).

Julien Mininberg - Helen of Troy Limited - CEO

We are back and I hope people can hear us again and I’m sorry for the technical problem. I’m not sure what it is but it seems to be gone now. With regard to the question, Maria, can you please rephrase so we make sure we have it crystal clear given the interruption?

Operator

Ma’am, can you please re-queue, we did have to remove you from the queue to get audio back.

(Operator Instructions)

Maria Vizuete - Piper Jaffray - Analyst

Great, thanks. It’s Maria again. Just thinking about the Beauty business improvement in the quarters, how much of that came from easier compares year-over-year? Thank you.

Brian Grass - Helen of Troy Limited - CFO

What I said before was when we’ve disclosed this previously, we disclosed it as a meaningful impact but did not provide a specific dollar amount because it’s inherently imprecise when you are trying to do this. But it was meaningful and we point it out only so that you don’t expect a 9.6% growth for the Beauty business for the back half of the year. They still would have had meaningful growth in the second quarter without the easy comparison but the easy comparison is a component of that 9.6%.

Julien Mininberg - Helen of Troy Limited - CEO

Let me put a small build on that because I think it may help which is regardless of the compare year-over-year, the Beauty business for multiple quarters has been improving and I hope you heard today in Brian’s remarks that we are increasing our guidance for the year. So what we started out saying, a mid-single-digit decline for FY16, and in my comments, I said that we were expecting not much more revenue growth year-over-year. So reduced versus that 9.6% that we reported today, but nonetheless we didn’t talk about that much decline either. That’s why we increased that guidance one click up from where we were before and we took the bottom of the range up for the whole company.

Just to be crystal clear for everyone on the call, we’re not suggesting that we won’t grow revenue for the Company year on year. In fact, we taken up the lower end of our guidance on revenue and we’ve maintained the top of our guidance on the revenue despite all the various uncertainties that are still out there in the back half. But on Beauty, we’re just seeing signs of improvement. We like what we see in foot care and we like the new product flow that’s now starting. And in fundamentals, packaging, quality, improved brand position, distribution, SKU rationalization, all these things that we’ve been mentioning, slowly but surely are making their way into the marketplace and making a difference.

Maria Vizuete - Piper Jaffray - Analyst

Thank you. That’s really helpful. Lastly, just wondering, maybe taking a step back here, how you’re thinking about savings targets and reinvestment of these dollars? What portion of savings do you expect to flow through to the bottom line versus offsetting incremental expenses such as FX or maybe one time type of expenses? Thank you.

Julien Mininberg - Helen of Troy Limited - CEO

Sure. To back up a moment, I think people on the call are aware that our project fuel for growth is targeted at $10 million of savings and we’ve already delivered $2 million of them last fiscal, committed an additional $4 million this fiscal and we’re doing very well against that target and we’ve identified the rest of the $10 million and are aware of each of the projects that it would take. As those savings come online, the foreign exchange difference that Brian was talking about is big enough versus our going in forecast for the year that created our original guidance, that all of that money is going into either increased marketing support or offsetting differences in foreign exchange.

And while it’s not dollar for dollar, so I can’t tell you the savings exactly out of the Healthy Directions warehouse consolidation was retargeted towards one of those things, foreign exchange or marketing support. I can say that the total amount of spend is being used to offset that and we’re very glad that we have that savings. In terms of additional savings, we are generating now more beyond the one or two major projects that have been completed and on track for the year. And then, as I’ve talked several times, we’re working on identifying the next projects and keep it on going down the line. Some of that will eventually hit the bottom line but we didn’t anticipate this much foreign exchange difference versus our going in forecast.

Maria Vizuete - Piper Jaffray - Analyst

Thank you so much. That’s really helpful. Best of luck.

Julien Mininberg - Helen of Troy Limited - CEO

Thank you very much, Maria.

Operator

Frank Camma, Sidoti.

Frank Camma - Sidoti & Company - Analyst

Good afternoon, guys.

Julien Mininberg - Helen of Troy Limited - CEO

How are you doing, Frank?

Frank Camma - Sidoti & Company - Analyst

A telecom company?

Julien Mininberg - Helen of Troy Limited - CEO

Funny. I’m not sure what that was all about. Thanks for your patience on that.

Frank Camma - Sidoti & Company - Analyst

No, I’m kidding. Just a question. You had really good — looks like good organic growth here with the sales number. I understand the FX issue but trying to figure out why you don’t get more of a lift all the way through to operating income? If you looked at it compared to last year, why the margin is essentially flat?

Brian Grass - Helen of Troy Limited - CFO

There’s a few things in there and FX is a huge part of it. As I mentioned, for every $1 of revenue impact which it was $8 million for the quarter, about $0.60 to $0.70 falls to the bottom line. So you can do the math and that’s a significant drag on operating income. The other thing that we experienced in the quarter, we did have very high sales but some of those were lower margin sales especially with respect to the Healthcare/Home Environment part of the business. They had much higher fan sales and then slightly lower water purification sales. So that mix is a drag on the margin. And then, we’re continuing to make investments in new product development and marketing and that is incremental to the prior year. So that will also have a drag on margins in comparison to the prior year. Those are the three major items.

Frank Camma - Sidoti & Company - Analyst

Okay, that’s helpful. You did call out, that was actually my second question. You called out water filtration. Is there something — that’s not really a seasonal product, so is there something unique that might have happened there that would’ve caused that decline?

Julien Mininberg - Helen of Troy Limited - CEO

No, just to be clear, we weren’t especially emphasizing it but it was mentioned in our comments in Brian’s section. So in the case of water filtration, we’re actually growing share but the total dollar value in the category’s coming down a little bit as there’s been some increase in private label filters. That will hit our competitor more than it’s hit us but the dollar value of the category is actually down a little and nevertheless, we’re picking up share.

So that’s the dynamic that is at work there. We continue to support the business actively with marketing support. We’ve got some very cool new products in the pipeline. We launched last year new pitchers as well but that was the situation there. Specifically on water filters specifically in this quarter.

Frank Camma - Sidoti & Company - Analyst

Okay, last thing is your tax rate going forward, is this a level we should expect going forward or does it moderate back down?

Brian Grass - Helen of Troy Limited - CFO

Yes, it moderates back down. You will see year-to-date we are at 16.2% and as we mentioned a couple times, our expectation is between 14% and 16% for the full year is still very much in place.

Frank Camma - Sidoti & Company - Analyst

Okay. Great. Thanks, guys.

Julien Mininberg - Helen of Troy Limited - CEO

Thank you Frank. Nice to have you join this crowd.

Frank Camma - Sidoti & Company - Analyst

Thank you.

Operator

Everyone, at this time there are no further questions. I’ll hand things back over to our speakers for any additional or closing remarks.

Julien Mininberg - Helen of Troy Limited - CEO

Great, thanks again and thank you for joining the call. We did have a great quarter. We’re very pleased about where we are with the first half and you’ve heard our guidance now slightly improved for the balance of the fiscal year. Still six strong months to go and we will be checking in with you shortly. We really appreciate your continued interest and your support for the Company. We do look forward to speaking with many of you in the coming days and the coming weeks and for others, we will be updating you on our third quarter results in January. Have a wonderful evening and thank you for joining.

Operator

Ladies and gentlemen, that does conclude today’s conference. We would like to thank you all for your participation today.

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