- GAAP Diluted Earnings Per Share
(EPS) of $1.00; Non-GAAP Adjusted Diluted EPS of $1.31
- Adjusts Fiscal Year 2017 Net Sales
Revenue Outlook
- Maintains GAAP Diluted EPS and
Non-GAAP Adjusted Diluted EPS Outlook
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 August 31,
2016.
Executive Summary
- Consolidated net sales decline of 0.3%,
which includes the negative impacts of approximately 1.6% from
Venezuela, 0.6% from foreign currency fluctuations and 2.1% from
business rationalization;
- Hydro Flask net sales of $29.1 million
and diluted EPS of $0.32;
- Increase in consolidated gross profit
margin of 4.2 percentage points; 2.6 percentage points from the
core business;
- Reported operating income of $37.5
million, or 10.2% of net sales, compared to $32.4 million, or 8.8%
of net sales in the same period last year;
- Non-GAAP adjusted operating income of
$47.9 million compared to $41.5 million in the same period last
year, an increase in adjusted operating margin of 1.8 percentage
points;
- Cash flow from operations of $44.0
million compared to $14.4 million in the same period last
year;
- Reported diluted EPS of $1.00 increased
19.0% from $0.84 in the same period last year;
- Non-GAAP adjusted diluted EPS of $1.31
increased 17.0% from $1.12 in the same period last year;
- Adjusts fiscal year 2017 net sales
revenue to a range of $1.550 to $1.590 billion from a range of
$1.570 billion to $1.620 billion; and
- Maintains GAAP diluted EPS in a range
of $4.37 to $4.77 and non-GAAP adjusted diluted EPS in a range of
$5.85 to $6.35.
Net Sales
Revenue Operating Margin Adj Operating
Margin Q2 FY2017 Q2 FY2016 $ Change
% Change Q2 FY2017 Q2 FY2016 Q2 FY2017
Q2 FY2016 Housewares
$ 105,976 $ 78,848 $
27,128 34.4 %
22.9 % 19.2 %
24.2 % 20.0
% Health & Home
144,453 143,254 1,199 0.8 %
6.5
% 3.4 %
9.7 % 6.4 % Nutritional Supplements
33,112 38,048 (4,936) (13.0) %
(3.7) % 7.8 %
2.0 % 12.6 % Beauty
84,629
108,979 (24,350) (22.3) %
6.0 % 8.7 %
9.0 % 10.7 % Total
368,170 369,129 (959) (0.3)
%
10.2 % 8.8 %
13.0 % 11.2 %
Julien R. Mininberg, Chief Executive Officer, stated: “Our
diversified business model continued to serve us well in the
quarter as we delivered adjusted diluted EPS growth of 17%. While
sales remained relatively flat year-over-year, we drove a 4.2
percentage point improvement in gross margin reflecting accretion
from the Hydro Flask acquisition and our efforts to sweeten the mix
and reduce our costs. We are very pleased with Hydro Flask’s growth
and performance, which contributed $29.1 million of net sales
during the quarter, fueling a 34.4% increase in net sales in our
Housewares segment, and was accretive to adjusted operating margin.
We saw growth and improved profitability from our Housewares and
Health & Home segments, which offset significantly softer sales
in our Beauty and Nutritional Supplements segments. Although
Housewares experienced a slight decline in its core business in the
second quarter, based on point-of-sale activity, we believe this
segment remains on track to meet our expectations for the full
year. Our Health & Home segment net sales grew 0.8%, with
profitability continuing to improve from our cost savings efforts
and focus on higher-margin business. Sales in our Beauty segment
performed well below our expectations due to the weak retail
environment and slower store traffic patterns. In addition, in an
effort to build a platform for greater long-term profitability in
Beauty, we made choices to rationalize lower-margin and
non-strategic businesses. Key initiatives in Beauty such as
innovation and branding are improving gross margin, sales from new
products, and retail placement, but we acknowledge that more work
is needed to improve the sales trend. Net sales and profitability
results for our Nutritional Supplements segment were disappointing.
We remain focused on improving this segment’s sales and profit
trajectory by investing in the multi-year strategic transition from
offline channels to online, as well as system upgrades and a
significant range of new marketing initiatives to attract and
convert a broader base of consumers.”
Mr. Mininberg continued: “The retail environment has been weaker
than expected in some of our categories and we have seen softness
in Beauty and Nutritional Supplements. We are therefore lowering
our net sales expectations, yet are maintaining our consolidated
full year adjusted EPS outlook driven by the resiliency and
strength of our diversified business model, contribution from
higher margin businesses such as Hydro Flask and improvements in
our profitability. We remain strongly committed to increasing
shareholder value by investing in our business to drive product
innovation, maintaining and growing market share, and delivering
further improvements in margin.”
Second Quarter Fiscal Year 2017
Consolidated Operating Results
- Net sales revenue decreased 0.3% to
$368.2 million compared to $369.1 million in the second quarter of
fiscal year 2016. Core business net sales revenue decreased $30.0
million, or 8.1%, which includes negative year-over-year impacts
from Venezuela and foreign currency fluctuations of 1.6% and 0.6%,
respectively. The Company also made strategic decisions to
rationalize certain lower margin business to improve long-term
profitability, which negatively impacted net sales by approximately
2.1% year-over-year.
- Gross profit margin increased 4.2
percentage points to 44.3% compared to 40.1% 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
reductions in product costs, partially offset by the unfavorable
impact of foreign currency fluctuations.
- SG&A was 34.1% of net sales
compared to 31.3% of net sales for the same period last year. The
increase is primarily due to: (i) higher compensation costs due to
hourly wage increases; (ii) higher share-based incentive
compensation expense; (iii) higher severance costs; and (iv) the
impact within our core business that lower net sales had on
operating leverage. These factors were partially offset by lower
advertising expenses and lower year-over-year foreign currency
revaluation losses.
- Operating income increased 15.6% to
$37.5 million compared to $32.4 million for the same period last
year primarily reflecting the overall improvement in core business
gross profit margin, accretion from the Hydro Flask acquisition,
lower advertising expense and lower foreign currency revaluation
losses, partially offset by: (i) a $1.8 million decline from the
Company’s Venezuela operations, due almost entirely to the adoption
of the new DICOM exchange rate; (ii) an increase in compensation
and severance expense; and, (iii) the negative impact of foreign
currency fluctuations on net sales and gross profit.
- Income tax expense as a percentage of
pretax income was 15.9% compared to 18.2% for the same period last
year. The year-over-year decrease in the Company’s effective tax
rate was primarily due to shifts in the mix of taxable income in
the Company’s various tax jurisdictions.
- Net income was $28.4 million, or $1.00
per diluted share on 28.2 million weighted average diluted shares
outstanding, compared to $24.5 million, or $0.84 per diluted share
on 29.0 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 $6.7 million to $51.8 million.
On an adjusted basis for the second 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 $47.9
million, or 13.0% of net sales, compared to $41.5 million, or 11.2%
of net sales, in the prior year, reflecting the overall improvement
in core business gross profit margin, the accretive impact of the
Hydro Flask acquisition, lower advertising expense, and 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 $1.8 million, which negatively impacted consolidated
adjusted operating margin by 0.3 percentage points.
- Adjusted income was $37.0 million, or
$1.31 per diluted share, compared to $32.3 million, or $1.12 per
diluted share, in the prior year, primarily reflecting the
improvement in adjusted operating income and lower tax expense,
partially offset by higher interest expense.
Second Quarter Fiscal Year 2017 Segment
Results
Health & Home net sales rose 0.8% driven by strong sales of
water filtration, seasonal fans, and early season shipments of
heaters, which were partially offset by declines in humidification
due to retailers exiting last year’s cough/cold/flu season with
higher inventory levels. Adjusted operating margin improved 3.3
percentage points to 9.7% due to product cost reductions, a better
product sales mix, lower cooperative advertising expense and lower
freight costs.
Housewares net sales increased by 34.4% driven by net sales
growth of 36.8% from Hydro Flask, with no comparable results in the
same period last year, partially offset by a 2.4% decline in core
business net sales revenue. In the core business, successful new
product introductions were offset by a soft retail environment and
lower consumer store traffic in the U.S., which is contributing to
smaller and less frequent replenishment orders from key retailers.
Adjusted operating margin improved 4.2 percentage points primarily
due to margin accretion from the Hydro Flask acquisition, partially
offset by expected margin compression from new product categories
in the core business.
Beauty net sales decreased 22.3%, which includes anticipated
declines of 5.3% and 3.7%, respectively, from the Company’s
Venezuelan and U.S. personal care businesses, and the negative
impact of approximately 1.2% from foreign currency fluctuations.
Gains from new product introductions were offset by the anticipated
decline in the foot care category of $4.2 million, or 3.8%, due to
competitive pressures and high inventory in the channel.
Additionally, SKU rationalization and a de-emphasis of sales into
the discount channel and other lower margin business negatively
impacted net sales by approximately 4.4%. The remaining decline is
primarily due to a softer than expected retail environment and an
overall decline in the beauty appliances category. Adjusted
operating margin declined 1.7 percentage points as an improvement
in gross profit margin from reduced product costs and better sales
mix was more than offset by a 1.3 percentage point decline from
Venezuela, the segment sales decline and its unfavorable impact on
operating leverage and foreign currency exchange rate
fluctuations.
Nutritional Supplements net sales decreased 13.0%, reflecting
lower response rates in the offline channel and a decline in the
legacy newsletter subscription business, as the Company continues
to implement a multi-year strategic transition from offline to
online channels. Adjusted operating margin declined by 10.6
percentage points due to the impact of the net sales decline on
operating leverage and higher promotion, advertising, customer
acquisition and online channel development costs.
Balance Sheet Highlights
- Cash and cash equivalents totaled $25.8
million at August 31, 2016, compared to $19.4 million at August 31,
2015.
- Total short- and long-term debt
increased to $548.6 million at August 31, 2016, compared to $474.7
million at August 31, 2015, a net increase of $73.8 million. The
increase primarily reflects $210.0 million drawn to fund the Hydro
Flask acquisition in March 2016.
- Accounts receivable turnover was 54.8
days at August 31, 2016, compared to 55.7 days at August 31,
2015.
- Inventory was $317.5 million at August
31, 2016, compared to $348.5 million at August 31, 2015. Inventory
turnover decreased to 2.7 times per year from 2.8 times per year
for the same period last year.
Fiscal Year 2017 Annual
Outlook
For fiscal year 2017, the Company now expects consolidated net
sales revenue in the range of $1.550 to $1.590 billion. The Company
is maintaining expectations for 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 also 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.
The Company’s sales outlook includes incremental sales from the
Hydro Flask acquisition, now estimated in the range of $85.0 to
$90.0 million for the period subsequent to closing in fiscal year
2017, compared to original expectations of $60.0 to $65.0 million,
and continues to include a combined negative impact of
approximately 3% of consolidated net sales from the re-measurement
of our Venezuela income statement at the new DICOM rate, foreign
currency fluctuations, rationalization of low profit business in
the Health & Home segment and the overhang from excess cold/flu
inventory in the retail channel due to a weak season last year.
In addition, the Company’s sales outlook now includes:
- an expected decline in net sales for
the Beauty segment in the range of 17% to 20% for fiscal year 2017,
which includes an additional negative impact from business
rationalization of approximately 3.2% of segment net sales revenue,
or 0.9% of consolidated net sales revenue; and
- an expected decline in net sales
revenue for the Nutritional Supplements segment in the range of 14%
to 16% for fiscal year 2017.
The Company continues to expect the year-over-year comparison of
earnings per diluted share to be negatively impacted by an
estimated $0.69 per share from the re-measurement of our Venezuela
financial statements at the DICOM rate, foreign currency
fluctuations, hourly wage increases and the comparative impact of
tax benefits in fiscal year 2016 that are not expected to repeat in
fiscal year 2017. The Company expects that the earnings per share
impact of additional sales declines in the core business referred
to above will be offset by additional accretion from the Hydro
Flask acquisition.
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, October 6, 2016. Institutional
investors and analysts interested in participating in the call are
invited to dial (888) 542-1101 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 6, 2016 until 11:59
p.m. Eastern Time on October 13, 2016 and can be accessed by
dialing 877-870-5176 and entering replay pin number 1906271. 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
(unaudited) (in thousands, except per share data)
Three Months Ended August 31, 2016 2015 Sales revenue, net $
368,170 100.0 % $ 369,129 100.0 % Cost of goods sold 205,202
55.7 % 221,124 59.9 % Gross profit 162,968 44.3 % 148,005
40.1 % Selling, general, and administrative expense
("SG&A") 125,481 34.1 % 115,573 31.3 % Asset impairment charges
- - % - - % Operating income 37,487 10.2 %
32,432 8.8 % Nonoperating income (expense), net 88 -
% (46) - % Interest expense (3,866) (1.1) % (2,503)
(0.7) % Income before income taxes 33,709 9.2 % 29,883 8.1 %
Income tax expense 5,354 1.5 % 5,431 1.5 % Net income
$ 28,355 7.7 % $ 24,452 6.6 % Diluted EPS $ 1.00 $ 0.84
Weighted average shares of common stock used in computing
diluted EPS 28,224 28,986 Six Months Ended August 31,
2016 2015 Sales revenue, net $ 716,108 100.0 % $ 714,474 100.0 %
Cost of goods sold 400,713 56.0 % 423,150 59.2 %
Gross profit 315,395 44.0 % 291,324 40.8 % Selling, general,
and administrative expense ("SG&A") 247,610 34.6 % 229,349 32.1
% Asset impairment charges 7,400 1.0 % 3,000 0.4 %
Operating income 60,385 8.4 % 58,975 8.3 %
Nonoperating income (expense), net 237 - % 91 - % Interest expense
(7,517) (1.0) % (5,394) (0.8) % Income before income
taxes 53,105 7.4 % 53,672 7.5 % Income tax expense
5,724 0.8 % 8,810 1.2 % Net income $ 47,381 6.6 % $ 44,862
6.3 % Diluted EPS $ 1.68 $ 1.54 Weighted average
shares of common stock used in computing diluted EPS 28,185 29,037
HELEN OF TROY
LIMITED AND SUBSIDIARIES Net Sales Revenue by Segment
(6) (Unaudited) (in thousands) Three
Months Ended August 31, % of Sales Revenue, net
2016 2015 $ Change % Change 2016
2015 Sales revenue by segment, net Housewares $ 105,976 $
78,848 $ 27,128 34.4 % 28.8 % 21.4 % Health & Home 144,453
143,254 1,199 0.8 % 39.2 % 38.8 % Nutritional Supplements 33,112
38,048 (4,936) (13.0) % 9.0 % 10.3 % Beauty 84,629
108,979 (24,350) (22.3) % 23.0 % 29.5 % Total sales revenue,
net $ 368,170 $ 369,129 $ (959) (0.3) % 100.0 % 100.0 %
Six Months Ended August 31, % of Sales Revenue,
net 2016 2015 $ Change % Change
2016 2015 Sales revenue by segment, net Housewares $
190,579 $ 144,034 $ 46,545 32.3 % 26.6 % 20.2 % Health & Home
290,808 286,296 4,512 1.6 % 40.6 % 40.1 % Nutritional Supplements
69,052 77,488 (8,436) (10.9) % 9.6 % 10.8 % Beauty 165,669
206,656 (40,987) (19.8) % 23.1 % 28.9 % Total sales
revenue, net $ 716,108 $ 714,474 $ 1,634 0.2 % 100.0 % 100.0 %
HELEN OF TROY LIMITED AND SUBSIDIARIES
Selected Consolidated Balance Sheet, Cash Flow and Liquidity
Information (Unaudited) (in thousands)
August 31, 2016 2015 (a) Balance Sheet: Cash
and cash equivalents $ 25,809 $ 19,405 Receivables, net 222,909
227,147 Inventory, net 317,497 348,463 Total assets, current
580,317 606,443 Total assets 1,855,515 1,715,774 Total liabilities,
current 296,359 309,724 Total long-term liabilities 567,345 494,784
Total debt 548,562 474,736 Stockholders' equity 991,811 911,266
Cash Flow: Depreciation and amortization $ 22,098 $ 21,227
Net cash provided by operating activities 85,681 52,211 Capital and
intangible asset expenditures 10,215 5,946 Payments to acquire
businesses, net of cash received 209,258 42,750 Net amounts
borrowed (71,900) 46,100 Liquidity: Working Capital $
283,958 $ 296,719
________________________
(a) As a result of the adoption of new accounting standards
for fiscal year 2017, balances as of August 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 August 31, 2016
Housewares Health & Home Nutritional
Supplements
Beauty Total Operating income, as reported (GAAP) $
24,233 22.9 % $ 9,397 6.5 % $ (1,229) (3.7) % $ 5,086 6.0 % $
37,487 10.2 % Non-cash share-based compensation (2) 705 0.7 % 1,005
0.7 % 333 1.0 % 1,101 1.3 % 3,144 0.9 % Amortization of intangible
assets (3) 671 0.6 % 3,542 2.5 % 1,571 4.7 %
1,438 1.7 % 7,222 2.0 % Adjusted operating income
(non-GAAP) $ 25,609 24.2 % $ 13,944 9.7 % $ 675 2.0 % $ 7,625 9.0 %
$ 47,853 13.0 %
Three Months Ended August 31, 2015
Housewares Health & Home Nutritional
Supplements
Beauty Total Operating income, as reported (GAAP) $
15,142 19.2 % $ 4,808 3.4 % $ 2,969 7.8 % $ 9,513 8.7 % $ 32,432
8.8 % Non-cash share-based compensation (2) 325 0.4 % 533 0.4 % 273
0.7 % 746 0.7 % 1,877 0.5 % Amortization of intangible assets (3)
338 0.4 % 3,868 2.7 % 1,564 4.1 % 1,438
1.3 % 7,208 2.0 % Adjusted operating income (non-GAAP) $
15,805 20.0 % $ 9,209 6.4 % $ 4,806 12.6 % $ 11,697 10.7 % $ 41,517
11.2 %
Six Months Ended August 31, 2016
Housewares Health & Home Nutritional
Supplements
Beauty Total Operating income, as reported (GAAP) $
39,733 20.8 % $ 19,001 6.5 % $ (6,501) (9.4) % $ 8,152 4.9 % $
60,385 8.4 % Patent litigation charge (4) - - % 1,468 0.5 % - - % -
- % 1,468 0.2 % Asset impairment charges (5) - - % -
- % 5,000 7.2 % 2,400 1.4 % 7,400 1.0 %
Subtotal 39,733 20.8 % 20,469 7.0 % (1,501) (2.2) % 10,552 6.4 %
69,253 9.7 % Non-cash share-based compensation (2) 1,733 0.9 %
2,915 1.0 % 1,365 2.0 % 2,745 1.7 % 8,758 1.2 % Amortization of
intangible assets (3) 1,328 0.7 % 7,080 2.4 %
3,142 4.6 % 2,876 1.7 % 14,426 2.0 % Adjusted
operating income (non-GAAP) $ 42,794 22.5 % $ 30,464 10.5 % $ 3,006
4.4 % $ 16,173 9.8 % $ 92,437 12.9 %
Six Months Ended
August 31, 2015 Housewares Health & Home
Nutritional
Supplements
Beauty Total Operating income, as reported (GAAP) $
26,325 18.3 % $ 13,226 4.6 % $ 5,589 7.2 % $ 13,835 6.7 % $ 58,975
8.3 % Asset impairment charges (5) - - % - - %
- - % 3,000 1.5 % 3,000 0.4 % Subtotal 26,325 18.3 %
13,226 4.6 % 5,589 7.2 % 16,835 8.1 % 61,975 8.7 % Non-cash
share-based compensation (2) 631 0.4 % 1,128 0.4 % 576 0.7 % 1,603
0.8 % 3,938 0.6 % Amortization of intangible assets (3) 650
0.5 % 7,368 2.6 % 3,128 4.0 % 2,876 1.4 %
14,022 2.0 % Adjusted operating income (non-GAAP) $ 27,606
19.2 % $ 21,722 7.6 % $ 9,293 12.0 % $ 21,314 10.3 % $ 79,935 11.2
%
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 August 31, Six
Months Ended August 31, 2016 2015 2016
2015 Net income $ 28,355 $ 24,452 $ 47,381 $ 44,862
Interest expense, net 3,840 2,495 7,448 5,368 Income tax
expense 5,354 5,431 5,724 8,810 Depreciation and
amortization, excluding amortized interest 11,142
10,873 22,098 21,227 EBITDA (Earnings before
interest, taxes, depreciation and amortization) 48,691 43,251
82,651 80,267 Add: Non-cash share-based compensation (2)
3,144 1,877 8,758 3,938 Patent litigation charge (4) - -
1,468 - Non-cash asset impairment charges (5) -
- 7,400 3,000 Adjusted EBITDA $ 51,835
$ 45,128 $ 100,277 $ 87,205
SELECTED OTHER DATA 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 August 31, 2016 Health &
Nutritional Housewares Home Supplements
Beauty Total Operating Income $ 24,233 $ 9,397 $
(1,229) $ 5,086 $ 37,487 Depreciation and amortization,
excluding amortized interest 1,442 5,284 2,174 2,242 11,142
Other income / (expense) - - - 62
62 EBITDA (Earnings before interest, taxes,
depreciation and amortization) 25,675 14,681 945 7,390 48,691
Add: Non-cash share-based compensation (2) 705
1,005 333 1,101 3,144 Adjusted EBITDA $
26,380 $ 15,686 $ 1,278 $ 8,491 $ 51,835
Three
Months Ended August 31, 2015 Health &
Nutritional Housewares Home 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
Add: Non-cash share-based compensation (2) 325
533 273 746 1,877 Adjusted EBITDA $
16,542 $ 10,855 $ 5,207 $ 12,524 $ 45,128
SELECTED OTHER DATA Reconciliation
of Non-GAAP Financial Measures - EBITDA (Earnings Before
Interest, Taxes, Depreciation and Amortization) and Adjusted EBITDA
by Segment (1) (6) (Unaudited) (in thousands)
Six Months Ended August 31, 2016 Health &
Nutritional Housewares Home Supplements
Beauty Total Operating income $ 39,733 $ 19,001 $
(6,501) $ 8,152 $ 60,385 Depreciation and amortization,
excluding amortized interest 2,771 10,517 4,134 4,676 22,098
Other income / (expense) - - - 168
168 EBITDA (Earnings before interest, taxes,
depreciation and amortization) 42,504 29,518 (2,367) 12,996 82,651
Add: Non-cash share-based compensation (2) 1,733 2,915 1,365
2,745 8,758 Patent litigation charge (4) - 1,468 - - 1,468
Non-cash asset impairment charges (5) - -
5,000 2,400 7,400 Adjusted EBITDA $
44,237 $ 33,901 $ 3,998 $ 18,141 $ 100,277
Six
Months Ended August 31, 2015 Health &
Nutritional Housewares Home 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
Add: Non-cash share-based compensation (2) 631 1,128 576
1,603 3,938 Non-cash asset impairment charges (5) -
- - 3,000 3,000 Adjusted EBITDA
$ 29,039 $ 24,931 $ 10,098 $ 23,137 $ 87,205
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 August 31,
Basic EPS Diluted EPS 2016 2015
2016 2015 2016 2015 Net income as
reported (GAAP) $ 28,355 $ 24,452 $ 1.02 $ 0.86 $ 1.00 $ 0.84
Non-cash share-based compensation, net of tax (2) 2,451 1,603 0.09
0.06 0.09 0.06 Amortization of intangible assets, net of tax (3)
6,228 6,278 0.22 0.22 0.22
0.22 Adjusted income (non-GAAP) $ 37,034 $ 32,333 $ 1.33 $
1.14 $ 1.31 $ 1.12 Weighted average shares of common stock
used in computing basic and diluted earnings per share
27,845 28,435 28,224 28,986
Six
Months Ended August 31, Basic EPS Diluted EPS
2016 2015 2016 2015 2016
2015 Net income as reported (GAAP) $ 47,381 $ 44,862 $ 1.70
$ 1.58 $ 1.68 $ 1.54 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 53,942 47,518 1.94 1.67 1.91 1.64 Non-cash share-based
compensation, net of tax (2) 6,544 3,345 0.24 0.12 0.23 0.12
Amortization of intangible assets, net of tax (3) 12,430
12,172 0.45 0.43 0.44 0.42
Adjusted income (non-GAAP) $ 72,916 $ 63,035 $ 2.62 $ 2.21 $ 2.59 $
2.17 Weighted average shares of common stock used in
computing basic and diluted earnings per share 27,809 28,478 28,185
29,037
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 Outlook for the
Balance of the Outlook for the
Six Months Ended
Fiscal Year
Fiscal Year
August 31, 2016
(Six Months)
(Twelve Months) Diluted EPS, as reported (GAAP) $ 1.68 $
2.69 - $ 3.09 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 1.91 2.69 - 3.09 4.60 - 5.00 Non-cash
share-based compensation, net of tax (2) 0.23 0.17 - 0.21 0.40 -
0.44 Amortization of intangible assets, net of tax (3) 0.44
0.41 - 0.47 0.85 -
0.91 Adjusted diluted EPS (non-GAAP) $ 2.59 $ 3.27 -
$ 3.77 $ 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,
provide 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 $3.14 million ($2.45 million
after tax) and $1.88 million ($1.60 million after tax) for the
three months ended August 31, 2016 and 2015, respectively, and
$8.76 million ($6.54 million after tax) and $3.94 million ($3.35
million after tax), for the six months ended August 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 $7.22 million ($6.23 million after tax) and
$7.21 million ($6.28 million after tax) for the three months ended
August 31, 2016 and 2015, respectively, and $14.43 million ($12.43
million after tax) and $14.02 million ($12.17 million after tax)
for the six months ended August 31, 2016 and 2015, respectively.
(4) Adjustment consists of a patent litigation charge of
$1.47 million ($1.46 million after tax) recorded for the six months
ended August 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) for the six months
ended August 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 six months ended August 31, 2016 include 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- and six-months ended August 31,
2016 include approximately two and a half months and five and a
half months of operating results, respectively, with no comparable
results for the same periods last year. (7) 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, (In
thousands)
2016 2015 2016 2015 Non-cash
share-based compensation (2) $ (693) $ (274) $ (2,214) $ (593)
Amortization of intangible assets (3) (994) (930) (1,996) (1,850)
Patent litigation charge (4) - - (4) - Asset impairment charges (5)
- - (2,303) (344) Total $ (1,687) $
(1,204) $ (6,517) $ (2,787) (8) The diluted EPS
outlook is based on an estimated weighted average shares
outstanding of 28.30 million for fiscal year 2017.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20161006006395/en/
Investors:ICR, Inc.Allison Malkin / Anne Rakunas203-682-8200 /
310-954-1113
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