- GAAP Diluted Earnings Per Share
(EPS) of $0.68; Non-GAAP Adjusted Diluted EPS of $1.27
- Maintains Fiscal Year 2017 Net Sales
Revenue in a Range of $1.57 to $1.62 Billion
- Expects GAAP Diluted EPS in a Range
of $4.37 to $4.77; Maintains Non-GAAP Adjusted Diluted EPS in a
Range of $5.85 to $6.35
The seventh financial table from the beginning of the release,
entitled: SELECTED OTHER DATA, Reconciliation of Non-GAAP
Financial Measures – GAAP Operating Income, (Earnings Before
Interest, Taxes, Depreciation and Amortization) and Adjusted EBITDA
by Segment (1) (6), (Unaudited), (in thousands), has been
corrected and replaced. The corrected table is included below.
The corrected release reads:
HELEN OF TROY LIMITED REPORTS FIRST QUARTER
FISCAL YEAR 2017 RESULTS
- GAAP Diluted Earnings Per Share
(EPS) of $0.68; Non-GAAP Adjusted Diluted EPS of $1.27
- Maintains Fiscal Year 2017 Net Sales
Revenue in a Range of $1.57 to $1.62 Billion
- Expects GAAP Diluted EPS in a Range
of $4.37 to $4.77; Maintains Non-GAAP Adjusted Diluted EPS in a
Range of $5.85 to $6.35
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 May 31, 2016.
Executive Summary for the First Quarter
of Fiscal Year 2017
- Net sales growth of 0.8%, which
includes a 1.1% decline from Venezuela and a 0.5% decline from
foreign currency;
- Hydro Flask net sales of $14.4 million,
ahead of expectations;
- Increase in gross profit margin of 2.3
percentage points;
- Reported operating income of $22.9
million compared to $26.5 million in the same period last
year;
- Non-GAAP adjusted operating income of
$44.6 million compared to $38.4 million in the same period last
year, an increase in adjusted operating margin of 1.7 percentage
points;
- Cash flow from operations of $41.7
million compared to $37.8 million in the same period last
year;
- Reported diluted EPS of $0.68 compared
to $0.70 in the same period last year; and
- Non-GAAP adjusted diluted EPS of $1.27
compared to $1.06 in the same period last year.
Adjusted Net Sales Revenue Operating Margin
Operating Margin Q1 FY2017 Q1 FY2016
$ Change
% Change Q1 FY2017 Q1 FY2016 Q1
FY2017 Q1 FY2016 Housewares
$
84,603 $ 65,186 $ 19,417 29.8 %
18.3 % 17.2 %
20.3 % 18.1 % Health & Home
146,355
143,042 3,313 2.3 %
6.6 % 5.9 %
11.3 %
8.7 % Nutritional Supplements
35,940 39,440 (3,500 ) (8.9 )
%
(14.7 ) % 6.6 %
6.5 % 11.4 %
Beauty
81,040 97,677 (16,637 ) (17.0 )
%
3.8 % 4.4 %
10.5 % 9.8 % Total
347,938 345,345 2,593 0.8 %
6.6 % 7.7 %
12.8 % 11.1 %
Julien R. Mininberg, Chief Executive Officer, stated: “Our
fiscal year is off to a solid start, with our first quarter results
highlighted by increased net sales revenue, expansion in adjusted
operating margin, and growth in adjusted earnings per share. These
results were driven by solid progress on our key strategic
priorities, which brought improvements in our gross profit margin
as we benefitted from sales mix, SKU rationalization initiatives,
the Hydro Flask acquisition and cost savings efforts. Our
Housewares and Health & Home segments led the way during the
quarter, with growth in revenues and profitability more than
sufficient to offset softer sales in our Beauty and Nutritional
Supplements segments. We believe this speaks to the strength of our
diversified business model and the discipline with which we
operate. Our Housewares segment net sales grew 29.8%, with the core
business contributing 7.8%, and the newly acquired Hydro Flask
business contributing 22% toward growth. Our Health & Home
segment net sales grew 2.3%, even as we rationalized certain parts
of that business to further improve profitability. While Beauty
adjusted operating margin grew during the first quarter, sales in
that segment performed below our expectations primarily due to
slower replenishment orders from some key retailers as they
adjusted their stocking patterns. Net sales and profitability for
our Nutritional Supplements segment also showed a decline, as we
continue to transition that business into new channels such as
online and select specialty nutrition, reducing the dependency on
legacy newsletter subscription and direct mail. Healthy Directions
remains a leader in the industry and we continue to strategically
invest in the long-term growth and profitability of this
business.”
Mr. Mininberg continued: “Although the retail headwinds and
macroeconomic uncertainties have intensified in certain segments of
our business, we are pleased to maintain our consolidated full year
outlook due to our diversified business model and the benefits from
the execution of our multi-year transformation strategy. We expect
to continue to invest in our strong portfolio of brands, our
operations, and our management talent to deliver strong cash flow
and shareholder value in fiscal year 2017.”
First Quarter Fiscal Year 2017
Consolidated Operating Results
- Net sales revenue increased 0.8% to
$347.9 million compared to $345.3 million in the first quarter of
fiscal year 2016. Core business net sales revenue decreased $12.5
million, or 3.6%, which includes a negative year-over-year impact
from Venezuela and foreign currency fluctuations of 1.1% and 0.5%,
respectively.
- Gross profit margin increased 2.3
percentage points to 43.8% compared to 41.5% for the same period
last year. The increase in consolidated gross profit margin is
primarily due to favorable shifts in product sales mix, product
rationalization efforts, margin accretion from Hydro Flask and
declines in product costs, partially offset by the unfavorable
impact of foreign currency fluctuations and lower sales in
Nutritional Supplements.
- SG&A was 35.1% of net sales
compared to 32.9% of net sales for the same period last year. The
increase is primarily due to: (i) higher share-based incentive
compensation expense, which increased the SG&A ratio by 1.0
percentage point; (ii) the impact of $1.5 million in patent
litigation charges, which increased the SG&A ratio by 0.4
percentage points, and (iii) the impact within our core business
that lower net sales had on operating leverage. These factors were
partially offset by lower outbound freight costs and lower
year-over-year foreign currency revaluation losses.
- Operating income was $22.9 million
compared to $26.5 million for the same period last year primarily
reflecting: (i) a non-cash impairment charge of $7.4 million
related to certain trademarks and brand assets in the Beauty and
Nutritional Supplements segments; (ii) a $1.7 million decline from
the Company’s Venezuela operations, due almost entirely to the
adoption of the new DICOM exchange rate; (iii) the impact of $1.5
million in patent litigation charges; (iv) an increase of $3.6
million in share-based incentive compensation expense; and, (v) the
negative impact of foreign currency fluctuations.
- Income tax expense as a percentage of
pretax income was 1.9% compared to 14.2% for the same period last
year. The year-over-year decrease in the Company’s effective tax
rate was primarily due to a $1.4 million tax benefit related to the
resolution of uncertain tax positions, and a $1.1 million tax
benefit resulting from the recognition of excess tax benefits from
share-based compensation in income tax expense rather than
additional paid in capital, reflecting a change in an accounting
pronouncement.
- Net income was $19.0 million, or $0.68
per diluted share on 28.1 million weighted average diluted shares
outstanding, compared to $20.4 million, or $0.70 per diluted share
on 29.1 million weighted average diluted shares outstanding in the
same period last year.
- Adjusted EBITDA (EBITDA excluding
non-cash asset impairment charges, non-cash share-based
compensation, and patent litigation charges, as applicable)
increased $6.4 million to $48.4 million.
On an adjusted basis for the first quarter of fiscal years 2017
and 2016, excluding non-cash asset impairment charges, non-cash
amortization of intangible assets, non‐cash share based
compensation, and patent litigation charges, as applicable:
- Adjusted operating income was $44.6
million, or 12.8% of net sales, compared to $38.4 million, or 11.1%
of net sales, in the prior year, reflecting the overall improvement
in consolidated gross profit margin, the accretive impact of the
Hydro Flask acquisition, lower outbound freight costs, lower
year-over-year foreign currency revaluation losses, partially
offset by the unfavorable impact of foreign currency fluctuations
and a decline in operating income from the Company’s Venezuela
operations of $1.7 million, due almost entirely to the adoption of
the new DICOM exchange rate.
- Adjusted income was $35.9 million, or
$1.27 per diluted share, compared to $30.7 million, or $1.06 per
diluted share, in the prior year, primarily reflecting the
improvement in adjusted operating income and lower tax
expense.
First Quarter Fiscal 2017 Segment
Results
Health & Home net sales rose 2.3% driven by strong sell-in
of seasonal fans and year-over-year gains in the thermometry and
air purification categories, which were partially offset by
declines in the hot/cold therapy category due to planned
rationalization of lower margin products and programs, and a
decline in water filtration due to the discontinuation of a large
seasonal promotion program in the club channel and a slowdown in
replenishment orders after strong sell-in during the fourth quarter
of fiscal year 2016. Adjusted operating margin improved 2.6
percentage points to 11.3% due to a better product sales mix,
product cost decreases, lower freight costs and better operating
leverage from higher net sales revenue.
Housewares net sales increased by 29.8% driven by net sales
growth of 22% from Hydro Flask, which was acquired on March 18,
2016 (with no comparable results in the same period last year), and
7.8% of core business net sales revenue growth primarily due to new
product introductions. Growth was slightly offset by higher
promotional spending in support of new product launches. Adjusted
operating margin improved 2.2 percentage points primarily due to
margin accretion from the Hydro Flask acquisition, partially offset
by higher advertising and promotional spending in support of new
product launches.
Beauty net sales decreased 17.0%, which includes the negative
impact of approximately 1.4% from foreign currency fluctuations and
an anticipated 4% decline from the Company’s Venezuelan operations,
due almost entirely to the adoption of the new DICOM exchange rate.
Gains from new product introductions were offset by the anticipated
decline in the foot care category of $4.0 million, or 4.1%, due to
competitive pressures and high inventory in the channel, as well as
inventory adjustments by a few key retailers following strong
shipments in the fourth quarter of fiscal year 2016. Adjusted
operating margin improved 0.7 percentage points despite a decline
in operating income of $1.7 million, or 1.7 percentage points, from
the segment’s Venezuelan operations. The increase in adjusted
operating margin was primarily due to an improvement in gross
profit margin from a better product sales mix, SKU rationalization
and lower product costs, as well as a decline in advertising
expense.
Nutritional Supplements net sales decreased 8.9%, reflecting
lower response rates in the offline channel and a decline in the
legacy newsletter subscription business, partially offset by growth
in the AutoDelivery program and selective distribution in
additional channels, as the Company broadens this segment’s
business model. Adjusted operating margin declined by 4.9
percentage points due to the impact of the net sales decline on
operating leverage, higher promotion, advertising, customer
acquisition and online channel development costs, and upfront
investment in direct response television to drive demand at
specialty retail.
Balance Sheet Highlights
- Cash and cash equivalents totaled $23.1
million at May 31, 2016, compared to $15.3 million at May 31,
2015.
- Total short- and long-term debt
increased to $587.5 million at May 31, 2016, compared to $434.0
million at May 31, 2015, a net increase of $153.5 million. The
increase primarily reflects $210.0 million drawn to fund the Hydro
Flask acquisition in March 2016.
- Accounts receivable turnover was 54.1
days at May 31, 2016, compared to 57.1 days at May 31, 2015.
- Inventory was $319.2 million at May 31,
2016, compared to $299.3 million at May 31, 2015. Inventory
turnover improved to 2.8 times per year from 2.7 times per year for
the same period last year.
Hydro Flask Acquisition
As previously reported, on March 18, 2016, the Company acquired
Steel Technology, LLC, doing business as Hydro Flask (“Hydro
Flask”). Hydro Flask is a leading designer, distributor and
marketer of high performance insulated stainless steel food and
beverage containers for active lifestyles. The aggregate purchase
price for the transaction was approximately $209.3 million in cash,
subject to customary adjustments. The purchase price was funded
with borrowings under the Company’s credit facility.
Fiscal Year 2017 Annual
Outlook
For fiscal year 2017, the Company continues to expect
consolidated net sales revenue in the range of $1.570 to $1.620
billion, which includes incremental sales from the Hydro Flask
acquisition in the range of $60.0 to $65.0 million for the period
subsequent to closing in fiscal year 2017. The Company’s sales
outlook implies consolidated sales growth of 1.6% to 4.8%, and core
business sales growth of -2.3% to 0.6%, both of which include the
following items that negatively impact the year-over-year
comparison of net sales revenue by a combined 3.3 percentage
points:
- The impact of the re-measurement of the
Company’s fiscal year 2017 Venezuela financial statements at the
DICOM rate, which is expected to negatively impact year-over-year
consolidated net sales revenue by approximately $22.0 million, or
1.4 percentage points;
- The assumption that end of June foreign
currency exchange rates will remain constant for the fiscal year,
which is expected to negatively impact year-over-year net sales
revenue by approximately $9.0 million, or 0.6 percentage
points;
- The rationalization of low profit
business, which is expected to negatively impact year-over-year net
sales revenue by approximately $16.0 million, or 1.0 percentage
point; and
- The overhang from excess cold/flu
inventory at retail due to the weak fiscal year 2016 cold/flu
season, which is expected to negatively impact the comparison of
net sales revenue by approximately $4.0 million, or 0.3 percentage
points.
Although the Company is maintaining its expectations for fiscal
year 2017 consolidated net sales, it is lowering its expectations
for the Nutritional Supplements segment. The Company now expects a
decline in net sales for the Nutritional Supplements segment of
mid-single digits for fiscal year 2017. The Company also expects
the Beauty segment to end fiscal year 2017 at the bottom end of the
Company’s original expected decline of 7% to 12%.
The Company now expects consolidated GAAP diluted EPS of $4.37
to $4.77, which includes an after-tax non-cash asset impairment
charge of $5.1 million and a patent litigation charge of $1.5
million. The Company is maintaining its adjusted diluted EPS
(non-GAAP) outlook in the range of $5.85 to $6.35, which excludes
after-tax non-cash asset impairment charges, patent litigation
charges, share-based compensation expense and intangible asset
amortization expense and includes incremental adjusted diluted EPS
(non-GAAP) from the Hydro Flask acquisition in the range of $0.28
to $0.32 per share.
The following items negatively impact the year-over-year
comparison of earnings per diluted share by a combined $0.69 per
share:
- The impact of the re-measurement of the
Company’s fiscal year 2017 Venezuela financial statements at the
current DICOM rate, which is expected to negatively impact the
year-over-year comparison by approximately $0.30 per diluted
share;
- The assumption that end of June foreign
currency exchange rates will remain constant for the fiscal year,
which is expected to negatively impact the year-over-year
comparison by approximately $0.18 per diluted share;
- The significant and well-publicized
shift in the hourly wage landscape is expected to have a negative
impact of approximately $0.14 per diluted share in fiscal year
2017; and
- The comparative impact of $0.07 per
diluted share of tax benefits in fiscal year 2016 that are not
expected to repeat in fiscal year 2017.
Consistent with the Company’s strategy of investing in core
business growth, its outlook includes approximately $0.45 per share
year-over-year in incremental investments in marketing,
advertising, new product and new channel development.
The Company’s outlook assumes that the severity of the cold/flu
season will be in line with historical averages. The diluted EPS
outlook is based on an estimated weighted average shares
outstanding of 28.3 million and an expected effective tax rate of
13% to 15% for the full fiscal year 2017. The guidance also
reflects the Company’s outlook for the retail environment and
recent declining trends in the retail sector and the broader
market. The likelihood and potential impact of any fiscal year 2017
acquisitions, future asset impairment charges, future foreign
currency fluctuations, or further share repurchases are unknown and
cannot be reasonably estimated; therefore, they are not included in
the Company’s sales and earnings outlook.
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, July 7, 2016. Institutional investors
and analysts interested in participating in the call are invited to
dial (888) 572-7034 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 July 7, 2016 until 11:59 p.m. Eastern
Time on July 14, 2016 and can be accessed by dialing (877) 870-5176
and entering replay pin number 2456521. 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 operating margin, 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 (NASDAQ, NM: HELE) 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 OXO®, Good Grips®, Hydro
Flask®, OXO tot®, OXO on®, Vicks®, Braun®, Honeywell®,
PUR®, Febreze®; Revlon®, Pro Beauty Tools®, Sure®, Pert®,
Infusium23®, Brut®, Ammens®, Hot Tools®, Bed Head®, Dr. Sinatra®,
Dr. David Williams®, and Dr. Whitaker®. All trademarks herein
belong to Helen of Troy Limited (or its affiliates) and/or are used
under license from their respective licensors.
For more information about Helen of Troy, please visit
www.hotus.com.
Forward Looking
Statements:
Certain written and oral statements made by our Company and
subsidiaries of our Company may constitute "forward-looking
statements" as defined under the Private Securities Litigation
Reform Act of 1995. This includes statements made in this press
release. Generally, the words "anticipates", "believes", "expects",
"plans", "may", "will", "should", "seeks", "estimates", "project",
"predict", "potential", "continue", "intends", and other similar
words identify forward-looking statements. All statements that
address operating results, events or developments that we expect or
anticipate will occur in the future, including statements related
to sales, earnings per share results, and statements expressing
general expectations about future operating results, are
forward-looking statements and are based upon our current
expectations and various assumptions. We believe there is a
reasonable basis for our expectations and assumptions, but there
can be no assurance that we will realize our expectations or that
our assumptions will prove correct. Forward-looking statements are
subject to risks that could cause them to differ materially from
actual results. Accordingly, we caution readers not to place undue
reliance on forward-looking statements. The forward-looking
statements contained in this press release should be read in
conjunction with, and are subject to and qualified by, the risks
described in the Company's Form 10-K for the year ended February
29, 2016 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, our ability to
deliver products to our customers in a timely manner and according
to their fulfillment standards, our relationships with key
customers and licensors, the costs of complying with the business
demands and requirements of large sophisticated customers, our
dependence on the strength of retail economies and vulnerabilities
to any prolonged economic downturn, the retention and recruitment
of key personnel, expectations regarding our recent and future
acquisitions, including our ability to realize anticipated cost
savings, synergies and other benefits along with our ability to
effectively integrate acquired businesses, foreign currency
exchange rate fluctuations, disruptions in U.S., U.K., Euro zone,
Venezuela, and other international credit markets, risks associated
with weather conditions, the duration and severity of the cold and
flu season and other related factors, our dependence on foreign
sources of supply and foreign manufacturing, and associated
operational risks including, but not limited to, long lead times,
consistent local labor availability and capacity, and timely
availability of sufficient shipping carrier capacity, risks to the
Nutritional Supplements segment associated with the availability,
purity and integrity of materials used in the manufacture of
vitamins, minerals and supplements, the impact of changing costs of
raw materials, labor and energy on cost of goods sold and certain
operating expenses, the geographic concentration and peak season
capacity of certain U.S. distribution facilities increases our
exposure to significant shipping disruptions and added shipping and
storage costs, our projections of product demand, sales and net
income are highly subjective in nature and future sales and net
income could vary in a material amount from such projections,
circumstances which 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, our ability to develop and introduce a continuing stream
of new products to meet changing consumer preferences, increased
product liability and reputational risks associated with the
formulation and distribution of vitamins, minerals and supplements,
the risks associated with potential adverse publicity and negative
public perception regarding the use of vitamins, minerals and
supplements, trade barriers, exchange controls, expropriations, and
other risks associated with foreign operations, debt leverage and
the constraints it may impose on our cash resources and ability to
operate our business, 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 vitamins, minerals and
supplements to the Company’s portfolio of products, the risks
associated with product recalls, product liability, other claims,
and related litigation against us, the risks associated with tax
audits and related disputes with taxing authorities, the risks of
potential changes in laws, including tax laws, health insurance
laws and regulations related to conflict minerals along with the
costs and complexities of compliance with such laws, and our
ability to continue to avoid classification as a controlled foreign
corporation. We undertake no obligation to publicly update or
revise any forward-looking statements as a result of new
information, future events or otherwise.
HELEN OF TROY LIMITED AND SUBSIDIARIES
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 May 31,
2016 2015 As Reported
(GAAP) Adjustments
Adjusted(non-GAAP)
As Reported (GAAP)
Adjustments
Adjusted(non-GAAP)
Sales revenue, net $ 347,938 100.0 % $ - $ 347,938
100.0 % $ 345,345 100.0 % $ - $ 345,345 100.0 % Cost
of goods sold 195,511 56.2 % -
195,511 56.2 % 202,026 58.5
% - 202,026 58.5 % Gross
profit 152,427 43.8 % - 152,427 43.8 % 143,319 41.5 % - 143,319
41.5 % Selling, general, and administrative expense
("SG&A") 122,129 35.1 % - 107,843 31.0 % 113,776 32.9 % -
104,901 30.4 % (5,614 ) (2 ) (2,061 ) (2 ) (7,204 ) (3 ) (6,814 )
(3 ) (1,468 ) (4 ) - Asset impairment charges 7,400
2.1 % (7,400 ) (5 ) - - %
3,000 0.9 % (3,000 ) (5 ) - -
% Operating income 22,898 6.6 %
21,686 44,584 12.8 % 26,543
7.7 % 11,875 38,418 11.1
% Nonoperating income, net 149 - % - 149 - % 138 - %
- 138 - % Interest expense (3,651 ) (1.0 ) % -
(3,651 ) (1.0 ) % (2,892 ) (0.8 ) % -
(2,892 ) (0.8 ) % Total other expense (3,502 ) (1.0 )
% - (3,502 ) (1.0 ) % (2,754 ) (0.8 ) %
- (2,754 ) (0.8 ) % Income before income taxes
19,396 5.6 % 21,686 41,082 11.8 % 23,789 6.9 % 11,875 35,664 10.3 %
Income tax expense 370 0.1 %
4,830 (7 ) 5,200 1.5 % 3,379
1.0 % 1,583 (7 ) 4,962
1.4 % Net income $ 19,026 5.5 % $ 16,856
$ 35,882 10.3 % $ 20,410 5.9 % $
10,292 $ 30,702 8.9 % Diluted EPS $
0.68 $ 0.59 $ 1.27 $ 0.70 $ 0.36 $ 1.06 Weighted average
shares of common stock used in computing diluted EPS 28,147 -
28,147 29,088 - 29,088
HELEN OF TROY LIMITED AND
SUBSIDIARIES Net Sales Revenue by Segment (6)
(Unaudited) (in thousands) Three
Months Ended May 31,
% of Sales Revenue, net 2016
2015 $ Change % Change
2016 2015 Sales revenue by segment, net
Housewares $ 84,603 $ 65,186 $ 19,417 29.8 % 24.3 % 18.9 % Health
& Home 146,355 143,042 3,313 2.3 % 42.1 % 41.4 % Nutritional
Supplements 35,940 39,440 (3,500 ) (8.9 ) % 10.3 % 11.4 % Beauty
81,040 97,677 (16,637 ) (17.0 ) % 23.3 % 28.3
% Total sales revenue, net $ 347,938 $ 345,345 $ 2,593 0.8
% 100.0 % 100.0 %
HELEN OF TROY LIMITED AND
SUBSIDIARIES Selected Consolidated Balance Sheet,
Cash Flow and Liquidity Information (Unaudited) (in
thousands) May 31,
2016
2015 (a) Balance Sheet: Cash and cash equivalents $
23,115 $ 15,262 Receivables, net 204,544 210,001 Inventory, net
319,249 299,300 Total assets, current 560,408 540,381 Total assets
1,841,516 1,656,935 Total liabilities, current 277,386 267,279
Total long-term liabilities 607,659 457,519 Total debt 587,491
433,966 Stockholders' equity 956,471 932,137 Cash Flow:
Depreciation and amortization $ 10,956 $ 10,354 Net cash provided
by operating activities 41,736 37,818 Capital and intangible asset
expenditures 5,154 2,717 Payments to acquire businesses, net of
cash received 209,258 42,750 Net amounts borrowed (32,700 ) 5,600
Liquidity: Working Capital $ 283,023 $ 273,102
(a) As a result of the adoption of new accounting standards
for fiscal year 2017, balances as of May 31, 2015 have be
reclassified to conform with current year’s presentation.
SELECTED OTHER DATA
Reconciliation of Non-GAAP Financial
Measures – GAAP Operating Income
to Adjusted Operating Income (non-GAAP) (1) (6)
(Unaudited) (in thousands) Three
Months Ended May 31, 2016 Housewares
Health & Home
NutritionalSupplements
Beauty Total Operating income, as
reported (GAAP) $ 15,500 18.3 % $ 9,604 6.6 % $
(5,272 ) (14.7 ) % $ 3,066 3.8 % $ 22,898 6.6
% Patent litigation charge (4) - - % 1,468 1.0 % - - % - - % 1,468
0.4 % Asset impairment charges (5) - - % - - %
5,000 13.9 % 2,400 3.0 % 7,400 2.1 %
Subtotal 15,500 18.3 % 11,072 7.6 % (272 ) (0.8 ) % 5,466 6.7 %
31,766 9.1 % Non-cash share-based compensation (2) 1,028 1.2 %
1,910 1.3 % 1,032 2.9 % 1,644 2.0 % 5,614 1.6 % Amortization of
intangible assets (3) 657 0.8 % 3,538 2.4 %
1,571 4.4 % 1,438 1.8 % 7,204 2.1 %
Adjusted operating income (non-GAAP) $ 17,185 20.3 % $ 16,520 11.3
% $ 2,331 6.5 % $ 8,548 10.5 % $ 44,584 12.8 %
Three Months Ended May 31, 2015
Housewares
Health & Home
NutritionalSupplements
Beauty Total Operating income,
as reported (GAAP) $ 11,183 17.2 % $ 8,418 5.9 % $
2,620 6.6 % $ 4,322 4.4 % $ 26,543
7.7 % Asset impairment charges (5) - - % - - %
- - % 3,000 3.1 % 3,000 0.9 %
Subtotal 11,183 17.2 % 8,418 5.9 % 2,620 6.6 % 7,322 7.5 % 29,543
8.6 % Non-cash share-based compensation (2) 306 0.5 % 595 0.4 % 303
0.8 % 857 0.9 % 2,061 0.6 % Amortization of intangible assets (3)
312 0.5 % 3,500 2.4 % 1,564 4.0
% 1,438 1.5 % 6,814 2.0 % Adjusted operating income
(non-GAAP) $ 11,801 18.1 % $ 12,513 8.7 % $ 4,487 11.4
% $ 9,617 9.8 % $ 38,418 11.1 %
SELECTED
OTHER DATA Reconciliation of Non-GAAP Financial
Measures - EBITDA (Earnings Before Interest, Taxes,
Depreciation and Amortization) and Adjusted EBITDA (1) (6)
(Unaudited) (in thousands) Three
Months Ended May 31, 2016 2015 Net income
$ 19,026 $ 20,410 Interest expense, net 3,608 2,874
Income tax expense 370 3,379 Depreciation and amortization,
excluding amortized interest 10,956 10,354
EBITDA (Earnings before interest, taxes, depreciation and
amortization) 33,960 37,017 Add: Non-cash share-based
compensation (2) 5,614 2,061 Patent litigation charge (4)
1,468 - Non-cash asset impairment charges (5) 7,400
3,000 Adjusted EBITDA $ 48,442 $ 42,078
SELECTED OTHER DATA - AS
AMENDED
Reconciliation of Non-GAAP Financial
Measures - EBITDA
(Earnings Before Interest, Taxes,
Depreciation and Amortization) and Adjusted EBITDA by Segment (1)
(6)
(Unaudited)
(in thousands)
Three Months Ended May 31, 2016 Housewares
Health & Home
Nutritional Supplements
Beauty Total Operating Income $ 15,500 $ 9,604 $
(5,272) $ 3,066 $ 22,898 Depreciation and amortization,
excluding amortized interest 1,329 5,233 1,960 2,434 10,956
Other income / (expense) - - - 106 106
EBITDA (Earnings before interest, taxes, depreciation and
amortization) 16,829 14,837 (3,312) 5,606 33,960 Add:
Non-cash share-based compensation (2) 1,028 1,910 1,032 1,644 5,614
Patent litigation charge (4) - 1,468 - - 1,468
Non-cash asset impairment charges (5) - -
5,000 2,400 7,400 Adjusted EBITDA $ 17,857 $
18,215 $ 2,720 $ 9,650 $ 48,442
Three Months Ended
May 31, 2015 Housewares
Health & Home
Nutritional Supplements
Beauty Total Operating Income $ 11,183 $ 8,418 $
2,620 $ 4,322 $ 26,543 Depreciation and amortization,
excluding amortized interest 1,008 5,063 1,968 2,315 10,354
Other income / (expense) - - - 120
120 EBITDA (Earnings before interest, taxes,
depreciation and amortization) 12,191 13,481 4,588 6,757 37,017
Add: Non-cash share-based compensation (2) 306 595 303 857
2,061 Non-cash asset impairment charges (5) -
- - 3,000 3,000 Adjusted EBITDA $
12,497 $ 14,076 $ 4,891 $ 10,614 $ 42,078
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) (6) (7)
(dollars in thousands, except per share data)
(Unaudited) Three Months Ended May 31,
Basic EPS Diluted EPS 2016
2015 2016 2015 2016
2015 Net income as reported (GAAP) $ 19,026 $ 20,410
$ 0.69 $ 0.72 $ 0.68 $ 0.70 Patent litigation charge, net of tax
(4) 1,464 - 0.05 - 0.05 - Asset impairment charges, net of tax (5)
5,097 2,656 0.18 0.09 0.18
0.09 Subtotal 25,587 23,066 0.92 0.81 0.91 0.79 Non-cash
share-based compensation, net of tax (2) 4,093 1,742 0.15 0.06 0.15
0.06 Amortization of intangible assets, net of tax (3) 6,202
5,894 0.22 0.21 0.22 0.20
Adjusted income (non-GAAP) $ 35,882 $ 30,702 $ 1.29 $ 1.08 $ 1.27 $
1.06 Weighted average shares of common stock used in
computing basic and diluted earnings per share 27,773 28,520 28,147
29,088
HELEN OF TROY LIMITED AND SUBSIDIARIES
Reconciliation of Fiscal Year 2017 Outlook for GAAP Diluted
EPS to Adjusted Diluted EPS (non-GAAP) (1) (7) (8)
(Unaudited) Fiscal Year Ended February 28,
2017
Quarter Ended
Outlook for the
May 31, 2016 Balance of the Fiscal Outlook for
the (Three Year Fiscal Year Months)
(Nine Months) (Twelve Months) Diluted EPS, as
reported (GAAP) $ 0.68 $ 3.69 -
$ 4.09 4.37 - $ 4.77 Patent litigation
charge, net of tax (4) 0.05 - - - 0.05 - 0.05 Asset impairment
charges, net of tax (5) 0.18 - -
- 0.18 -
0.18 Subtotal 0.91 3.69 - 4.09 4.60 - 5.00 Non-cash
share-based compensation, net of tax (2) 0.15 0.25 - 0.29 0.40 -
0.44 Amortization of intangible assets, net of tax (3) 0.22
0.63 - 0.69
0.85 - 0.91 Adjusted diluted EPS
(non-GAAP) (1) $ 1.27 $ 4.58 - $
5.08 $ 5.85 - $ 6.35
HELEN OF TROY LIMITED AND SUBSIDIARIES
Notes to Press Release
(1) This press release contains non-GAAP financial measures.
Adjusted operating income, adjusted operating margin, adjusted
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. Additionally, the
non-GAAP financial measures are used by management for measuring
and evaluating the Company’s performance. 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 non-cash
share-based compensation expense of $5.61 million ($4.09 million
after tax) and $2.06 million ($1.74 million after tax),
respectively, for the three months ended May 31, 2016 and 2015,
respectively. Share-based compensation expense is recognized for
share-based awards outstanding under share-based compensation
plans. (3) Adjustments consist of non-cash intangible asset
amortization expense of $7.20 million ($6.20 million after tax) and
$6.81 million ($5.89 million after tax), respectively, for the
three months ended May 31, 2016 and 2015, respectively. (4)
Adjustment consists of a patent litigation charge of $1.47 million
($1.46 million after tax) recorded during the three months ended
May 31, 2016. (5) Adjustments consist of non-cash asset
impairment charges of $7.40 million ($5.10 million after tax) and
$3.00 million ($2.66 million after tax), respectively, for the
three months ended May 31, 2016 and 2015, respectively. The
non-cash charges relate to certain brand assets and trademarks in
our Nutritional Supplements and Beauty segments, which were written
down to their estimated fair values, determined on the basis of
future discounted cash flows using the relief from royalty
valuation method. (6) The VapoSteam business was acquired on
March 31, 2015 and its operations are reported in the Health &
Home segment. Results reported for the three months ended May 31,
2016 includes one incremental month of operating results compared
to the same period last year. The Hydro Flask business was
acquired on March 18, 2016 and its operations are reported in the
Housewares segment. Results reported for the three months ended May
31, 2016 include approximately two and a half months of operating
results, with no comparable results for the same period last year.
(7) Total tax effects of adjustments described in Notes 2
through 5, for each of the periods presented:
Three Months Ended May 31, (In thousands)
2016
2015 Non-cash share-based compensation
(2) (1,521 ) (319 ) Amortization of intangible assets (3)
(1,002 ) (920 ) Patent litigation charge (4) (4 ) - Asset
impairment charges (5) (2,303 ) (344 ) Total $ (4,830
) $ (1,583 ) (8) The diluted EPS outlook is based on
an estimated weighted average shares outstanding of 28.30 million
for fiscal year 2017.
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version on businesswire.com: http://www.businesswire.com/news/home/20160707006357/en/
Investors:ICR, Inc.Allison Malkin / Anne Rakunas203-682-8200 /
310-954-1113
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