- Delivers Third Quarter Revenue of
$445.5 Million; GAAP Diluted Earnings Per Share (EPS) of $1.63,
including $0.16 per diluted share of Succession Costs Related to
its Former CEO
- Third Quarter Non-GAAP Adjusted
Diluted EPS of $2.07
- Company Expects Fiscal Year 2016
GAAP Diluted EPS in a Range of $4.18 to $4.48, Including CEO
Succession Costs and Asset Impairment Charges
- Company Maintains Fiscal Year 2016
Non-GAAP Adjusted Diluted EPS in a Range of $5.50 to $5.85
Helen of Troy Limited (NASDAQ, NM:HELE), designer, developer and
worldwide marketer of consumer brand-name housewares, health and
home, nutritional supplement and beauty products, today reported
results for the three-month period ended November 30, 2015.
Julien R. Mininberg, Chief Executive Officer, stated: “We are
pleased with our third quarter performance, which we believe has us
solidly on track to achieve our annual goals. Sales grew 2.3%
despite a foreign currency drag of 2.0% and we made further
progress toward our seven key strategic priorities that are guiding
our multi-year transformation. We are seeing improved organic
growth from our efforts to improve innovation, which led to strong
growth in the Health & Home segment despite foreign currency
exposure and the comparison to a strong performance in the third
quarter last year. In our Beauty segment, we are seeing a favorable
response to new product introductions and improved branding in
appliances. Our Housewares segment’s growth included its first
foray into kitchen electronics and metal bakeware. Nutritional
Supplements saw a decline in the quarter, as it continues to shift
emphasis from its direct mail and print newsletter subscription
business to online and auto delivery. We are pleased to deliver
adjusted diluted EPS of $2.07, overcoming foreign currency
headwinds that have been greater than expected. Based on our
performance to date and the continued progress we are making on our
key initiatives, we are maintaining our full year outlook even as
we have experienced a slow start to the cold and flu season,
experience more significant foreign exchange pressures, and see
considerable variability in the retail environment.”
As previously disclosed, the Company resolved a lawsuit brought
by its former CEO, which resulted in the settlement of severance
compensation due under his employment and separation agreements.
The severance compensation was previously accrued and disclosed in
fiscal year 2014 and was settled through the issuance of common
shares of the Company on November 17, 2015. The Company also
transferred ownership of a life insurance policy on the lives of
its former CEO and his spouse as part of the settlement. As a
result of the transfer of the policy and other expenses incurred in
connection with the settlement, the Company recorded CEO succession
costs of $6.71 million ($4.64 million after tax), or $0.16 per
fully diluted share, in the third quarter of fiscal year 2016.
Key Highlights for the Third Quarter of
Fiscal Year 2016 Compared to the Third Quarter of Fiscal Year
2015
- Net sales revenue increased $9.8
million, or 2.3%, which includes a 1.6% increase in core business
net sales revenue (excluding incremental sales from VapoSteam). The
increase in net sales revenue includes a negative impact of 2.0%
from foreign currency fluctuations.
- Health & Home (formerly referred to
as the “Healthcare/Home Environment” segment) rose 5.3%, driven by
successful new product introductions and the VapoSteam acquisition,
partially offset by lower heater sales as a result of warmer fall
and early winter temperatures, lower water and air filtration
sales, and a negative impact of $4.9 million, or 2.8% from foreign
currency fluctuations.
- Housewares increased 2.1%, primarily
due to successful new product introductions and increases in
internet retail sales, partially offset by higher promotional
spending in support of new product launches, certain promotional
placement that did not repeat, a decrease in the club channel and
inventory reductions at a key retailer. The Company expects
year-over-year growth to return to more normalized levels in the
mid-single digits for the full fiscal year.
- Beauty decreased 0.3% including a
negative impact of $3.5 million, or 2.6%, from foreign currency
fluctuations. Gains in sales of pedicure appliances and curling,
straightening and specialty styling irons were partially offset by
a decline in the personal care category due to competitive
pressures and some lost distribution at retail. Net sales revenue
includes year-over-year growth of $3.4 million from operations in
Venezuela, which is a highly inflationary economy.
- Nutritional Supplements decreased 2.5%,
reflecting a decline in average order values, promotional
discounting to grow the segment’s new buyer file, and de-emphasis
of the legacy print newsletter subscription business. The Company
continues to expect flat to low-single digit growth during the
comparable eight month year-over-year period in fiscal year
2016.
- Diluted EPS was $1.63 and adjusted
diluted EPS was $2.07 on 28.6 million diluted shares
outstanding.
- Adjusted EBITDA declined $1.7 million
to $75.4 million.
Third Quarter of Fiscal Year 2016
Consolidated Operating Results
- Net sales revenue increased 2.3% to
$445.5 million compared to $435.7 million in the third quarter of
fiscal year 2015. Net sales revenue includes the operating results
of VapoSteam, which was acquired on March 31, 2015, with no
comparable results in our prior year period. Core business net
sales revenue increased $6.9 million, or 1.6%. Foreign currency
fluctuations negatively impacted consolidated U.S. Dollar reported
net sales revenue by $8.8 million, or 2.0%, year-over-year.
- Gross profit margin decreased 0.6
percentage points to 41.0% compared to 41.6% for the same period
last year. The decrease in consolidated gross profit margin is
primarily due to the unfavorable impact of foreign currency
fluctuations.
- SG&A was 28.5% of net sales
compared to 26.7% of net sales for the same period last year. The
increase is primarily due to CEO succession costs, which increased
the SG&A ratio for the third quarter of fiscal year 2016 by 1.5
percentage points, and the comparative impact of a gain from the
amendment of a license agreement and a decrease in product
liability estimates, which decreased the SG&A ratio for the
same period last year by 2.1 percentage points. These factors were
partially offset by lower year-over-year foreign currency
revaluation losses, lower outbound freight costs, and operating
leverage on higher net sales revenue.
- Operating income was $55.6 million
compared to $65.0 million for the same period last year primarily
reflecting the negative impact of foreign currency fluctuations,
CEO succession costs of $6.7 million and the comparative impact of
a $7 million gain from a license amendment recorded in the same
period last year.
- Income tax expense as a percentage of
pretax income was 11.8% compared to 9.2% for the same period last
year. The year-over-year comparison of the Company’s 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
1.2 percentage point reduction in the same period last year related
to a $7.0 million pre-tax gain from the amendment of a license
agreement. Income tax expense for the fiscal quarter ended November
30, 2015 includes a tax benefit of $2.4 million due to the
finalization of certain tax returns, mostly offset by tax expense
of $2.0 million related to the provision for an uncertain tax
position in a foreign jurisdiction.
- Net income was $46.8 million, or $1.63
per diluted share on 28.6 million weighted average diluted shares
outstanding, and includes after tax CEO succession costs of $4.6
million, or $0.16 per diluted share related to the settlement of a
lawsuit with the Company’s former CEO. This compares to net income
in the third quarter of fiscal year 2015 of $55.4 million, or $1.92
per diluted share on 28.8 million weighted average diluted shares
outstanding, which included: (i) an after-tax gain of $0.24 per
diluted share from the amendment of a license agreement; and (ii)
an after-tax decrease in product liability estimates of $0.05 per
diluted share.
- Adjusted EBITDA (EBITDA excluding
non-cash asset impairment charges, CEO succession costs,
acquisition-related expenses, and non-cash share-based
compensation, as applicable) was $75.4 million compared to $77.0
million in the same period last year. The decline was primarily due
to the negative impact of foreign currency fluctuations and the
comparative impact of a pre-tax gain of $7 million from the
amendment of a license agreement recorded in the same period last
year.
On an adjusted basis for the third quarter of fiscal years 2016
and 2015, excluding non-cash asset impairment charges, CEO
succession costs, non-cash amortization of intangible assets,
acquisition-related expenses, non‐cash share based compensation, as
applicable:
- Adjusted operating income was $71.4
million compared to $73.2 million for the third quarter of fiscal
year 2015.
- Adjusted income was $59.2 million, or
$2.07 per diluted share, compared to $62.6 million, or $2.17 per
diluted share, for the third quarter of fiscal year 2015, primarily
reflecting the negative impact of foreign currency fluctuations and
the comparative impacts of a $6.9 million after tax gain from the
amendment of a license agreement and a reduction in product
liability estimates of $1.4 million, after tax, recorded in the
same period last year. The fiscal quarters ended November 30, 2015
and 2014 include net income from our operations in Venezuela of
$2.9 and $1.0 million, respectively, or diluted EPS of $0.10 and
$0.03, respectively.
First Nine Months of Fiscal Year 2016
Consolidated Operating Results
- Net sales revenue increased 8.7% to
$1,160.0 million compared to $1,067.4 million in the first nine
months of fiscal year 2015. Net sales revenue includes four
additional months of Nutritional Supplements results compared to
the same period last year and eight months of results from
VapoSteam, which was acquired on March 31, 2015, with no comparable
results in the same period last year. Core business net sales
revenue increased $35.3 million, or 3.3%. Foreign currency
fluctuations negatively impacted consolidated U.S. Dollar reported
net sales revenue by $25.1 million, or 2.4%, year-over-year.
- Gross profit margin increased 0.1
percentage points to 40.8% compared to 40.7% 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 30.7% of net sales
compared to 29.3% for the same period last year. The increase is
primarily due to: (i) CEO succession costs, which increased the
SG&A ratio by 0.6 percentage points for the nine months ended
November 30, 2015; (ii) the comparative impact of a gain from the
amendment of a license agreement, which decreased the SG&A
ratio for the same period last year by 0.7 percentage points; (iii)
an additional four months of operating results from the Nutritional
Supplements segment, which operates at higher relative SG&A
ratio; and (iv) higher investments in advertising, marketing and
product development. These factors were partially offset by lower
year-over-year foreign currency revaluation losses, lower outbound
freight costs, and operating leverage on higher net sales
revenue.
- Operating income was $114.6 million
compared to $112.8 million for the same period last year. Operating
income for the first nine 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. Operating income for the
first nine months of fiscal year 2016 includes $6.7 million of CEO
succession costs with no comparable expense in the same period last
year. Operating income for the first nine months of fiscal year
2015 includes $3.6 million of acquisition-related expenses, with no
comparable expense in the same period this year.
- Income tax expense as a percentage of
pretax income was 14.1% compared to 10.7% 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 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.
Additionally, the $7.0 million gain from the amendment of a
trademark license agreement decreased the effective tax rate in the
comparative period by 0.8 percentage points. Income tax expense for
the nine months ended November 30, 2015 includes a tax benefit of
$2.4 million due to the finalization of certain tax returns, mostly
offset by tax expense of $2.0 million related to the provision for
an uncertain tax position in a foreign jurisdiction.
- Net income was $91.6 million, or $3.17
per diluted share on 28.9 million weighted average diluted shares
outstanding.
- Adjusted EBITDA (EBITDA excluding
non-cash asset impairment charges, CEO succession costs,
acquisition-related expenses, and non-cash share-based
compensation, as applicable) was $162.6 million compared to $159.2
million in the same period last year. Adjusted EBITDA for the nine
months ended November 30, 2014 includes a pre-tax gain of $7
million from the amendment of a license agreement and a pre-tax
decrease in product liability estimates of $2.2 million.
On an adjusted basis for the first nine months of fiscal years
2016 and 2015, excluding non-cash asset impairment charges, CEO
succession costs, non-cash amortization of intangible assets,
acquisition-related expenses, and non‐cash share based
compensation, as applicable:
- Adjusted operating income was $151.3
million compared to $148.3 million for the first nine months of
fiscal year 2015.
- Adjusted income was $122.2 million, or
$4.23 per diluted share, compared to $121.9 million, or $4.19 per
diluted share, for the first nine months of fiscal year 2015. The
nine months ended November 30, 2015 and 2014 include net income
from our operations in Venezuela of $5.5 and $2.0 million,
respectively, or diluted EPS of $0.19 and $0.07, respectively.
Balance Sheet Highlights
- Cash and cash equivalents totaled $21.1
million at November 30, 2015, compared to $21.1 million at November
30, 2014.
- Total short- and long-term debt
decreased to $474.7 million at November 30, 2015, compared to
$555.7 million at November 30, 2014, a net reduction of $81.0
million after funding the VapoSteam acquisition for $42.8 million
in March 2015 and share repurchases of $50.0 million in August
2015.
- Accounts receivable turnover was 58.8
days at November 30, 2015, compared to 64.4 days at November 30,
2014.
- Inventory was $339.4 million at
November 30, 2015, compared to $318.8 million at November 30,
2014.
Subsequent Events
Today, the Company, and certain of its subsidiaries, entered
into an Amended and Restated Employment Agreement with Julien
Mininberg, the Company’s CEO. The new agreement, among other
things, extends the term of Mr. Mininberg’s employment through
February 28, 2019. Timothy Meeker, Chairman of the Board, stated,
“We are delighted to have reached an agreement with Julien
Mininberg to extend his tenure with the Company. The Board is very
pleased with the Company’s results under Mr. Mininberg’s direction.
He has embodied the leadership, vision and strategic thinking that
has led to a transformation that we believe has set up the Company
for continued success.”
Fiscal Year 2016 Annual
Outlook
For fiscal year 2016, the Company expects consolidated net sales
revenue in the range of $1.500 to $1.536 billion and diluted EPS
(GAAP) in the range of $4.18 to $4.48, including after-tax non-cash
asset impairment charges and CEO succession costs of $0.09 and
$0.16 per share, respectively. The Company continues to expect
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, CEO succession costs, 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 28.9 million for the full fiscal year 2016.
Further, our outlook now assumes that the severity of the cold/flu
season will likely be below historical averages, based on cold/flu
incidence to date. 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, January 7, 2016. Institutional
investors and analysts interested in participating in the call are
invited to dial (888) 427-9411 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 January 7, 2016 until 11:59
p.m. Eastern Time on January 12, 2016 and can be accessed by
dialing (877) 870-5176 and entering replay pin number 3323342. 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 November 30, 2015
2014 As Reported (GAAP) Adjustments
Adjusted(non-GAAP) As Reported (GAAP)
Adjustments Adjusted(non-GAAP) Sales revenue,
net $ 445,503 100.0 % $ - $ 445,503 100.0 % $ 435,674 100.0 % $ - $
435,674 100.0 % Cost of goods sold 262,979 59.0
% - 262,979 59.0 %
254,263 58.4 % - 254,263
58.4 % Gross profit 182,524 41.0 % - 182,524 41.0 % 181,411
41.6 % - 181,411 41.6 % Selling, general, and administrative
expense 126,891 28.5 % (6,707 ) (2) 111,114 24.9 % 116,368 26.7 % -
108,188 24.8 % (2,209 ) (3) (1,327 ) (3) (6,861 ) (4) (6,853 ) (4)
Asset impairment charges - - % -
- - % - - % -
- - % Operating income 55,633
12.5 % 15,777 71,410 16.0
% 65,043 14.9 % 8,180
73,223 16.8 % Nonoperating income, net
142 - % - 142 - % 87 - % - 87 - % Interest expense (2,741 )
(0.6 ) % - (2,741 ) (0.6 ) % (4,173 )
(1.0 ) % - (4,173 ) (1.0 ) % Total other
expense (2,599 ) (0.6 ) % - (2,599 )
(0.6 ) % (4,086 ) (0.9 ) % - (4,086 )
(0.9 ) % Income before income taxes 53,034 11.9 % 15,777 68,811
15.4 % 60,957 14.0 % 8,180 69,137 15.9 % Income tax expense
6,256 1.4 % 3,383 (8)
9,639 2.2 % 5,580 1.3 %
1,000 (8) 6,580 1.5 % Net income $
46,778 10.5 % $ 12,394 $ 59,172 13.3
% $ 55,377 12.7 % $ 7,180 $ 62,557
14.4 % Diluted EPS $ 1.63 $ 0.44 $ 2.07 $ 1.92
$ 0.25 $ 2.17 Weighted average shares of common stock used
in computing diluted EPS 28,634 - 28,634 28,824 - 28,824
Nine Months Ended November 30, 2015
2014 As Reported (GAAP) Adjustments
Adjusted(non-GAAP) As Reported (GAAP)
Adjustments Adjusted(non-GAAP) Sales revenue,
net $ 1,159,977 100.0 % $ - $ 1,159,977 100.0 % $ 1,067,401 100.0 %
$ - $ 1,067,401 100.0 % Cost of goods sold 686,129
59.2 % - 686,129 59.2 %
632,726 59.3 % - 632,726
59.3 % Gross profit 473,848 40.8 % - 473,848 40.8 %
434,675 40.7 % - 434,675 40.7 % Selling, general, and
administrative expense 356,240 30.7 % (6,707 ) (2) 322,503 27.8 %
312,906 29.3 % - 286,329 26.8 % (6,147 ) (3) (4,539 ) (3) (20,883 )
(4) (18,427 ) (4) - (3,611 ) (5) Asset impairment charges
3,000 0.3 % (3,000 ) (6) - -
% 9,000 0.8 % (9,000 ) (6)
- - % Operating income 114,608
9.9 % 36,737 151,345 13.0
% 112,769 10.6 % 35,577
148,346 13.9 % Nonoperating income, net 233 -
% - 233 - % 234 - % - 234 - % Interest expense (8,135 ) (0.7
) % - (8,135 ) (0.7 ) % (11,588 ) (1.1
) % - (11,588 ) (1.1 ) % Total other expense
(7,902 ) (0.7 ) % - (7,902 ) (0.7 ) %
(11,354 ) (1.1 ) % - (11,354 ) (1.1 ) %
Income before income taxes 106,706 9.2 % 36,737 143,443 12.4 %
101,415 9.5 % 35,577 136,992 12.8 % Income tax expense
15,066 1.3 % 6,170 (8)
21,236 1.8 % 10,801 1.0 %
4,323 (8) 15,124 1.4 % Net income $
91,640 7.9 % $ 30,567 $ 122,207 10.5
% $ 90,614 8.5 % $ 31,254 $ 121,868
11.4 % Diluted EPS $ 3.17 $ 1.06 $ 4.23 $ 3.12
$ 1.07 $ 4.19 Weighted average shares of common stock used
in computing diluted EPS 28,903 - 28,903 29,070 - 29,070
HELEN OF TROY LIMITED AND
SUBSIDIARIES
Net Sales Revenue by Segment
(7)
(Unaudited)
(in thousands)
Three Months Ended November 30, % of Sales
Revenue, net 2015 2014
$ Change
% Change
2015 2014 Sales revenue by segment, net Housewares $
87,816 $ 85,984 $ 1,832 2.1 % 19.7 % 19.7 % Health & Home
186,418 176,994 9,424 5.3 % 41.8 % 40.6 % Nutritional Supplements
37,492 38,462 (970) (2.5) % 8.4 % 8.8 % Beauty 133,777
134,234 (457) (0.3) % 30.0 % 30.8 % Total sales
revenue, net $ 445,503 $ 435,674 $ 9,829 2.3 % 100.0 % 100.0 %
Nine Months Ended November 30, % of Sales
Revenue, net 2015 2014
$ Change
% Change
2015 2014 Sales revenue by segment, net Housewares $
231,850 $ 222,377 $ 9,473 4.3 % 20.0 % 20.8 % Health & Home
472,714 445,701 27,013 6.1 % 40.8 % 41.8 % Nutritional Supplements
114,980 63,096 51,884 * 9.9 % 5.9 % Beauty 340,433
336,227 4,206 1.3 % 29.3 % 31.5 % Total sales revenue, net $
1,159,977 $ 1,067,401 $ 92,576 8.7 % 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)
November 30, 2015 2014 Balance Sheet:
Cash and cash equivalents $ 21,141 $ 21,056 Receivables, net
288,979 289,449 Inventory, net 339,397 318,823 Total assets,
current 680,390 668,556 Total assets 1,782,472 1,763,696 Total
liabilities, current 293,986 731,942 Total long-term liabilities
520,552 172,764 Total debt 474,707 555,707 Stockholders' equity
967,934 858,990 Cash Flow: Depreciation and amortization $
31,946 $ 29,075 Net cash provided by operating activities 72,759
63,472 Capital and intangible asset expenditures 12,418 4,893
Payments to acquire businesses, net of cash received 42,750 195,943
Net amounts borrowed 41,500 363,100 Liquidity: Working
Capital $ 386,404 $ (63,386)
SELECTED OTHER DATA
Reconciliation of Non-GAAP Financial
Measures - EBITDA
(Earnings Before Interest, Taxes,
Depreciation and Amortization) and Adjusted EBITDA (1) (7)
(Unaudited)
(in thousands)
Three Months Ended November 30, Nine Months Ended
November 30, 2015 2014 2015 2014
Net income $ 46,778 $ 55,377 $ 91,640 $ 90,614 Interest
expense, net 2,698 4,159 8,066 11,541 Income tax expense
6,256 5,580 15,066 10,801 Depreciation and amortization,
excluding amortized interest 10,719 10,582
31,946 29,075 EBITDA (Earnings before interest,
taxes, depreciation and amortization) 66,451 75,698 146,718 142,031
Add: CEO succession costs (2) 6,707 - 6,707 -
Non-cash share-based compensation (3) 2,209 1,327 6,147 4,539
Acquisition-related expenses (5) - - - 3,611 Non-cash
asset impairment charges (6) - - 3,000
9,000 Adjusted EBITDA $ 75,367 $ 77,025 $ 162,572 $ 159,181
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 November 30, 2015 Health
& Nutritional Housewares Home
Supplements Beauty Total Operating Income $
15,536 $ 18,072 $ 3,034 $ 18,991 $ 55,633 Depreciation and
amortization, excluding amortized interest 1,065 5,281 1,956 2,417
10,719 Other income / (expense) - - -
99 99 EBITDA (Earnings before interest, taxes,
depreciation and amortization) 16,601 23,353 4,990 21,507 66,451
Add: CEO succession costs (2) 1,348 2,722 704 1,933 6,707
Non-cash share-based compensation (3) 303 657
398 851 2,209 Adjusted EBITDA $ 18,252
$ 26,732 $ 6,092 $ 24,291 $ 75,367
Three Months
Ended November 30, 2014 Health & Nutritional
Housewares Home Supplements Beauty
Total Operating Income $ 18,275 $ 18,694 $ 6,214 $ 21,860 $
65,043 Depreciation and amortization, excluding amortized
interest 892 5,125 2,032 2,533 10,582 Other income /
(expense) - - - 73 73
EBITDA (Earnings before interest, taxes, depreciation and
amortization) 19,167 23,819 8,246 24,466 75,698 Add:
Non-cash share-based compensation (3) 111 230
- 986 1,327 Adjusted EBITDA $ 19,278 $ 24,049
$ 8,246 $ 25,452 $ 77,025
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)
Nine Months Ended November 30, 2015
Nutritional Housewares Health & Home
Supplements Beauty Total Operating income $
41,861 $ 31,298 $ 8,623 $ 32,826 $ 114,608 Depreciation and
amortization, excluding amortized interest 3,148 15,858 5,889 7,051
31,946 Other income / (expense) - - -
164 164 EBITDA (Earnings before interest,
taxes, depreciation and amortization) 45,009 47,156 14,512 40,041
146,718 Add: CEO succession costs (2) 1,348 2,722 704 1,933
6,707 Non-cash share-based compensation (3) 934 1,785 974
2,454 6,147 Non-cash asset impairment charges (6) -
- - 3,000 3,000 Adjusted EBITDA
$ 47,291 $ 51,663 $ 16,190 $ 47,428 $ 162,572
Nine
Months Ended November 30, 2014 Nutritional
Housewares Health & Home Supplements
Beauty Total Operating income $ 45,201 $ 31,919 $
6,324 $ 29,325 $ 112,769 Depreciation and amortization,
excluding amortized interest 2,669 15,384 3,391 7,631 29,075
Other income / (expense) - - - 187
187 EBITDA (Earnings before interest, taxes,
depreciation and amortization) 47,870 47,303 9,715 37,143 142,031
Add: Non-cash share-based compensation (3) 645 892 - 3,002
4,539 Acquisition-related expenses (5) - - 3,611 - 3,611
Non-cash asset impairment charges (6) - -
- 9,000 9,000 Adjusted EBITDA $ 48,515
$ 48,195 $ 13,326 $ 49,145 $ 159,181
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) (8)
(dollars in thousands, except per share
data)
(Unaudited)
Three Months Ended November 30, Basic EPS
Diluted EPS 2015 2014 2015 2014
2015 2014 Net income as reported (GAAP) (10) $ 46,778
$ 55,377 $ 1.66 $ 1.95 $ 1.63 $ 1.92 CEO succession costs, net of
tax (2) 4,645 - 0.17 - 0.16
- Subtotal 51,423 55,377 1.83 1.95 1.80 1.92 Non-cash
share-based compensation, net of tax (3) 1,813 1,187 0.06 0.04 0.06
0.04 Amortization of intangible assets, net of tax (4) 5,936
5,993 0.22 0.21 0.21 0.21
Adjusted income (non-GAAP) (10) $ 59,172 $ 62,557 $ 2.10 $ 2.20 $
2.07 $ 2.17 Weighted average shares of common stock used in
computing basic and diluted earnings per share (GAAP) 28,129 28,414
28,634 28,824
Nine Months Ended November 30, Basic
EPS Diluted EPS 2015 2014 2015
2014 2015 2014 Net income as reported (GAAP)
(11) $ 91,640 $ 90,614 $ 3.23 $ 3.17 $ 3.17 $ 3.12 CEO succession
costs, net of tax (2) 4,645 - 0.16 - 0.16 - Acquisition-related
expenses, net of tax (5) - 2,306 - 0.08 - 0.08 Asset impairment
charges, net of tax (6) 2,656 8,155 0.09
0.28 0.09 0.28 Subtotal 98,941 101,075 3.49
3.53 3.42 3.48 Non-cash share-based compensation, net of tax (3)
5,158 4,026 0.18 0.14 0.18 0.14 Amortization of intangible assets,
net of tax (4) 18,108 16,767 0.64 0.59
0.63 0.58 Adjusted income (non-GAAP) (11) $ 122,207 $
121,868 $ 4.31 $ 4.26 $ 4.23 $ 4.19 Weighted average shares
of common stock used in computing basic and diluted earnings per
share (non-GAAP) 28,361 28,630 28,903 29,070
HELEN OF TROY LIMITED AND
SUBSIDIARIES
Reconciliation of Fiscal Year 2016
Outlook for GAAP Diluted Earnings Per Share (EPS)
to Adjusted Diluted EPS (non-GAAP) (1)
(9)
(Unaudited)
Fiscal Year Ended February 29, 2016 Period
Ended November 30, Outlook for the Balance of
2015 (Nine The Fiscal Year (Three Outlook for the
Fiscal Months) Months) Year
(Twelve Months) Diluted EPS, as reported (GAAP) $ 3.17 $ 1.01 -
$ 1.31 4.18 - $ 4.48 CEO succession costs (1) 0.16 - - - 0.16 -
0.16 Asset impairment charges, net of tax (5) 0.09 -
- - 0.09
- 0.09 Subtotal 3.42 1.01 - 1.31
4.43 - 4.73 Non-cash share-based compensation, net of tax (2) 0.18
0.07 - 0.10 0.25 - 0.28 Amortization of intangible assets, net of
tax (3) 0.63 0.19 -
0.21 0.82 -
0.84 Adjusted diluted EPS (non-GAAP) $ 4.23 $ 1.27
- $ 1.62 $ 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 consist of CEO succession
costs of 6.71 million ($4.64 million after tax) incurred in
connection with the settlement of a dispute with our former CEO.
See page 1 of this press release for further information on these
costs.
(3)
Adjustments for the three months ended
November 30, 2015 and 2014 consist of non-cash share-based
compensation expense of $2.21 million ($1.81 million after tax) and
$1.33 million ($1.19 million after tax), respectively. Adjustments
for the nine months ended November 30, 2015 and 2014 consist of
non-cash share-based compensation expense of $6.15 million ($5.16
million after tax) and $4.54 million ($4.03 million after tax),
respectively. Share-based compensation expense is recognized for
share-based awards outstanding under share-based compensation
plans.
(4)
Adjustments for the three months ended
November 30, 2015 and 2014 consist of non-cash intangible asset
amortization expense of $6.86 million ($5.94 million after tax) and
$6.85 million ($5.99 million after tax), respectively. Adjustments
for the nine months ended November 30, 2015 and 2014 consist of
non-cash intangible asset amortization expense of $20.88 million
($18.11 million after tax) and $18.43 million ($16.77 million after
tax), respectively.
(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 for the nine months ended
November 30, 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.
(7)
Healthy Directions was acquired on June
30, 2014 and its operations are reported under the Nutritional
Supplements segment. Results reported for the fiscal quarter and
year-to-date periods ended November 30, 2015 include three- and
nine-months, respectively. Results reported for the fiscal quarter
and year-to-date periods ended November 30, 2014 include three- and
five-months, respectively.
The VapoSteam business was acquired on March 31, 2015 and
its operations are reported under the Health & Home segment.
Results reported for the fiscal quarter and year-to-date periods
ended November 30, 2015 include three- and eight- months,
respectively, with no comparable results for the same periods last
year.
(8)
Total tax effects of adjustments described
in Notes 2 through 6, for each of the periods presented:
Three Months Ended November 30, Nine Months Ended
November 30, 2015 2014 2015 2014
Tax Effects of Adjustments CEO succession costs
(2) $ (2,062 ) $ - $ (2,062 ) $ - Non-cash share-based compensation
(3) (396 ) (140 ) (989 ) (513 ) Amortization of intangible assets
(4) (925 ) (860 ) (2,775 ) (1,660 ) Acquisition-related expenses
(5) - - - (1,305 ) Asset impairment charges (6) -
- (344 ) (845 ) Total $ (3,383 ) $
(1,000 ) $ (6,170 ) $ (4,323 )
(9)
The diluted EPS outlook is based on an
estimated weighted average shares outstanding of 29.00 million for
fiscal year 2016.
(10)
The fiscal quarters ended November 30,
2015 and 2014 include net income from our operations in Venezuela
of $2.87 and $0.95 million, respectively, or diluted EPS of $0.10
and $0.03, respectively.
(11)
The nine months ended November 30, 2015
and 2014 include net income from our operations in Venezuela of
$5.54 and $2.01 million, respectively, or diluted EPS of $0.19 and
$0.07, respectively.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160107006237/en/
Investors:ICR, Inc.Allison Malkin / Anne Rakunas203-682-8200 /
310-954-1113
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