- GAAP Diluted Earnings Per Share
(EPS) of $2.07; Non-GAAP Adjusted Diluted EPS of $2.37
- Updates Net Sales Revenue
Outlook
- Raises 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 November 30,
2016.
Executive Summary
- Consolidated net sales decline of 0.2%,
which includes the negative impacts of approximately 1.6 percentage
points from Venezuela re-measurement, 0.8 percentage points from
foreign currency fluctuations and 2.4 percentage points from
business rationalization
- Hydro Flask net sales of $34.3 million
and diluted EPS of $0.38
- Beauty, Housewares and Nutritional
Supplements net sales in line with Company expectations despite
unfavorable currency impacts of 1.5 and 0.9 percentage points in
Beauty and Housewares, respectively
- Health & Home net sales below
expectations driven by a below average start to the cough/cold/flu
season and unfavorable currency
- Consolidated gross profit margin
expansion of 2.7 percentage points; 1.2 percentage point expansion
from the core business
- Reported operating income of $63.3
million, or 14.2% of net sales, including an unfavorable impact of
0.5 percentage points from Venezuela, compared to $55.6 million, or
12.5% of net sales in the same period last year
- Non-GAAP adjusted operating income of
$73.4 million compared to $71.4 million in the same period last
year, an increase in adjusted operating margin of 0.5 percentage
points, including an unfavorable impact of 0.4 percentage points
from Venezuela
- Cash flow from operations increase of
$32.0 million, or 149%, to $53.5 million from $21.5 million in the
same period last year
- Reported diluted EPS of $2.07, an
increase of 27.0% from $1.63 in the same period last year
- Non-GAAP adjusted diluted EPS of $2.37,
an increase of 14.5% from $2.07 in the same period last year
- Updates fiscal year 2017 net sales
revenue guidance to a range of $1.520 to $1.550 billion from a
range of $1.550 to $1.590 billion due primarily to expected
continued weakness of the cough/cold/flu season
- Raises fiscal year 2017 GAAP diluted
EPS guidance to a range of $4.72 to $4.92 from a range of $4.37 to
$4.77
- Raises fiscal year 2017 non-GAAP
adjusted diluted EPS to a range of $6.20 to $6.50 from a range of
$5.85 to $6.35
Net Sales
Revenue Operating Margin Adj Operating Margin
Q3 FY2017 Q3 FY2016 $ Change % Change
Q3 FY2017 Q3 FY2016 Q3 FY2017 Q3 FY2016
Housewares
$ 124,723 $ 87,816 $ 36,907 42.0 %
23.4 % 17.7 %
24.5 % 19.9 % Health
& Home
179,842 186,418 (6,576) (3.5) %
11.2
% 9.7 %
13.7 % 13.4 % Nutritional Supplements
32,163 37,492 (5,329) (14.2) %
(0.2) % 8.1 %
5.8 % 15.2 % Beauty
107,686
133,777 (26,091) (19.5) %
13.0 % 14.2 %
15.3 % 17.4 % Total
$ 444,414 $ 445,503
(1,089) (0.2) %
14.2 % 12.5 %
16.5 %
16.0 %
In addition, the Company:
- repurchased 922,731 shares of its
common stock in the open market during the quarter for $75
million;
- recently expanded the commitment under
its revolving credit facility from $650 million to $1.0 billion and
increased its leverage capacity for acquisitions;
- announced that Thurman Case has joined
the Helen of Troy Board as of January 1, 2017; and
- announces that Jay Caron will join the
Company as Chief Supply Chain Officer effective January 9,
2017.
Julien R. Mininberg, Chief Executive Officer, stated: “Our
transformation strategy, combined with the ongoing benefits of our
diversified business model, led to a strong quarter of
profitability highlighted by a 270 basis point increase in gross
profit margin and a 14.5% increase in adjusted EPS. We were pleased
to achieve this performance on slightly lower consolidated net
revenue, driven by the continued strength of our Hydro Flask
business, our efforts to sweeten our core business sales mix and
further operational efficiencies from our shared services platform.
Our focus on the disciplined management of our business and balance
sheet resulted in a 149% increase in cash flow from operations,
allowing us to repurchase $75 million of our common shares with
only a small increase in leverage. Hydro Flask contributed $34.3
million of net sales to our Housewares segment and was accretive to
the segment’s operating margin. Housewares also grew sales and
expanded operating margin in its core business. Health & Home
continued its trend of margin expansion even as a below average
start to the cough/cold/flu season weighed on sales. Beauty segment
sales declined in line with our guidance, but reflected a
sequential improvement from the second quarter. Beauty’s sales
performance continues to be impacted by our efforts to rationalize
lower margin and non-strategic business, Venezuela re-measurement,
unexpected retail holiday inventory reductions and even further
deterioration in foreign currency, which have overshadowed the
success of new innovations. In Nutritional Supplements, sales
declined in line with guidance as we continue the strategic
transition from offline channels to online, while investing in
system upgrades and a significant range of new marketing
initiatives to attract and convert a broader base of
consumers.”
Mr. Mininberg continued: “Just after quarter end, we expanded
the commitment under our revolving credit facility to $1 billion,
adding $350 million in additional borrowing capacity. The amended
credit agreement also increases the debt leverage allowed for
acquisitions. We believe the increase to this facility on favorable
terms positions us well for additional acquisition opportunities
that meet our disciplined criteria.
“We are pleased to have delivered three strong quarters of
profitability so far this fiscal year and are now raising our
adjusted EPS guidance for the full year to a range of $6.20 to
$6.50,” Mr. Mininberg stated further. “This increase comes even as
we make additional investments in key brands such as PUR, OXO, and
Hydro Flask in the fourth quarter. As we enter the final quarter of
the year, we now believe it is prudent to lower our annual
consolidated net revenue range to reflect the expectation that the
cough/cold/flu season will remain below average and the unfavorable
currency environment will remain at current levels. We remain
confident in our strategies and believe our continued focus on
product innovation, market share gains and margin expansion will
lead to long term growth in sales at increasing rates of
profitability. We believe this has us poised to increase value for
Helen of Troy stakeholders.”
Third Quarter Fiscal Year 2017
Consolidated Operating Results
- Net sales revenue decreased 0.2% to
$444.4 million compared to $445.5 million in the third quarter of
fiscal year 2016. Core business net sales revenue decreased $35.4
million, or 8.0%, which includes negative year-over-year impacts
from Venezuela and foreign currency fluctuations of 1.6 and 0.8
percentage points, respectively. The core business decline also
includes strategic decisions to rationalize certain lower margin
business to improve long-term profitability, which negatively
impacted net sales by approximately 2.4 percentage points
year-over-year.
- Gross profit margin increased 2.7
percentage points to 43.7% compared to 41.0% for the same period
last year. The increase in consolidated gross profit margin is
primarily due to favorable shifts in our core business 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 29.5% of net sales
compared to 28.5% 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 advertising expense; and (iv)
the impact that lower net sales had on operating leverage in our
core business. These factors were partially offset by improved
distribution and logistics efficiency and lower outbound freight
costs and the comparative impact of $6.7 million of CEO succession
costs recorded last year.
- Operating income increased 13.8% to
$63.3 million compared to $55.6 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 foreign currency revaluation losses, improved distribution
and logistics efficiency and lower outbound freight costs, and the
comparative impact of $6.7 million of CEO succession costs recorded
last year. The increase was partially offset by: (i) a $3.1 million
decline from the Company’s Venezuela operations, due almost
entirely to the adoption of the DICOM exchange rate; (ii) an
increase in compensation 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 3.7% compared to 11.8% 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, benefits from the
finalization of certain tax returns and a change in an accounting
standard.
- Net income was $57.6 million, or $2.07
per diluted share on 27.8 million weighted average diluted shares
outstanding, compared to $46.8 million, or $1.63 per diluted share
on 28.6 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, CEO succession costs and patent litigation charges,
as applicable) increased $2.2 million to $77.5 million.
On an adjusted basis for the third quarter of fiscal years 2017
and 2016, excluding non-cash asset impairment charges, non-cash
amortization of intangible assets, non‐cash share based
compensation, CEO succession costs and patent litigation charges,
as applicable:
- Adjusted operating income was $73.4
million, or 16.5% of net sales, compared to $71.4 million, or 16.0%
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, and improved distribution and logistics
efficiency and lower outbound freight costs, partially offset by
the unfavorable impact of foreign currency fluctuations and a
decline in operating income from the Company’s Venezuela operations
of $3.1 million, which negatively impacted consolidated adjusted
operating margin by 0.4 percentage points.
- Adjusted income was $66.0 million, or
$2.37 per diluted share, compared to $59.2 million, or $2.07 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.
Third Quarter Fiscal Year 2017 Segment
Results
Housewares net sales increased by 42.0% driven by net sales
growth of 39.1% from Hydro Flask and a 2.9% increase in core
business net sales revenue. In the core business, growth was fueled
by new products and expansion in the club channel, partially offset
by a decline in EMEA sales due to the negative impact of the
weakened British Pound. Adjusted operating margin improved 4.6
percentage points primarily due to the accretive impact of the
Hydro Flask acquisition and margin expansion in the core business.
Margin improvement in the core business came from greater operating
leverage, improvements in sales mix, and lower distribution,
logistics and outbound freight costs, partially offset by higher
advertising expenses and margin compression from new product
categories.
Health & Home net sales declined 3.5% reflecting the
Company’s de-emphasis of lower margin hot/cold therapy business and
declines in humidification due to retailers exiting last year’s
below average cough/cold/flu season with higher inventory levels.
These declines were partially offset by strong sales gains in PUR
water filtration, early seasonal shipments of thermometry products,
and growth in air purification. Adjusted operating margin improved
0.3 percentage points to 13.7% due to product cost reductions, a
better product sales mix, and lower outbound freight costs,
partially offset by higher advertising expense.
Beauty net sales decreased 19.5%, which includes anticipated
declines of 5.3% and 2.0%, respectively, from the Company’s
Venezuelan and North American personal care businesses, and the
negative impact of approximately 1.5% from foreign currency
fluctuations. Another 2.0% of the decline is due to our de-emphasis
of the foot care category, as it has become commoditized.
Additionally, rationalization of lower margin business negatively
impacted net sales by approximately 3.1%. The remaining decline is
primarily due to a softer than expected retail environment, tighter
retail inventory management and an overall decline in point of sale
activity for the broader retail beauty appliances category.
Adjusted operating margin declined 2.1 percentage points reflecting
an improvement in gross profit margin that was more than offset by
a 1.7 percentage point decline from Venezuela re-measurement,
unfavorable foreign currency and lower operating leverage from the
decline in sales.
Nutritional Supplements net sales decreased 14.2%, primarily
reflecting lower response rates in the offline channel, lower
average order values, an increase in discounts to promote buyer
file growth, and a decline in the legacy newsletter subscription
business, as the Company continues to implement a strategic
transition from offline to online channels. Adjusted operating
margin decreased by 9.4 percentage points due primarily 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 $16.8
million at November 30, 2016, compared to $21.1 million at November
30, 2015. During the third quarter, the Company repurchased 922,731
million shares for a total of $75.0 million.
- Total short- and long-term debt
increased to $564.9 million at November 30, 2016, compared to
$470.4 million at November 30, 2015, a net increase of $94.5
million. The increase primarily reflects $210.0 million drawn to
fund the Hydro Flask acquisition in March 2016 and $75 million
drawn for share repurchases in the third quarter.
- Accounts receivable turnover was 57.8
days at November 30, 2016, compared to 58.8 days at November 30,
2015.
- Inventory was $301.1 million at
November 30, 2016, compared to $339.4 million at November 30, 2015.
Inventory turnover was 2.8 times, unchanged from the same period
last year.
Subsequent Event – Amendment to Credit
Agreement
On December 7, 2016, the Company entered into a First Amendment
to the Credit Agreement (the “Amendment”) with Bank of America,
N.A., as administrative agent and the other lenders party thereto.
The Amendment increases the unsecured revolving commitment of the
Credit Agreement from $650 million to $1 billion, subject to the
terms and limitations described in the Credit Agreement. The
maturity of the commitment under the Credit Agreement was extended
from January 16, 2020 to December 7, 2021. The Amendment also
increased the leverage ratio for acquisitions. In addition, the
amount the Company may request to increase the aggregate revolving
loan commitment under the accordion was increased from $150 million
to $200 million, subject to lender approval and the satisfaction of
certain other conditions.
Fiscal Year 2017 Annual
Outlook
For fiscal year 2017, the Company now expects consolidated net
sales revenue in the range of $1.520 to $1.550 billion compared to
the previous range of $1.55 to $1.59 billion. The Company is
raising expectations for consolidated GAAP diluted EPS in the range
of $4.72 to $4.92. The Company is also raising its adjusted diluted
EPS (non-GAAP) outlook in the range of $6.20 to $6.50, 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 from the Hydro Flask acquisition.
The Company’s outlook assumes that the severity of the
cough/cold/flu season will remain below historical averages. In
addition, the Company’s sales outlook now includes expected fiscal
year 2017 net sales revenue for the Health & Home segment in
line with the prior year and expected growth in Housewares’ core
business net sales revenue for fiscal year 2017 in the low-single
digits. The guidance also reflects the Company’s outlook for the
retail environment and the broader market and the assumption that
unfavorable currency environment will remain at current levels for
the remainder of the fiscal year.
The diluted EPS outlook is based on an estimated weighted
average shares outstanding of 28.0 million and an expected
effective tax rate of 10% to 12% for the full fiscal year 2017. 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, January 5, 2017. Institutional
investors and analysts interested in participating in the call are
invited to dial (877) 545-1402 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 5, 2017 until 11:59
p.m. Eastern Time on January 12, 2017 and can be accessed by
dialing 877-870-5176 and entering replay pin number 1840483. 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®, OXO Tot®, Hydro Flask®,
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 November 30, 2016
2015 Sales revenue, net $ 444,414 100.0 % $ 445,503 100.0 %
Cost of goods sold 250,199 56.3 % 262,979 59.0 %
Gross profit 194,215 43.7 % 182,524 41.0 % Selling, general,
and administrative expense ("SG&A") 130,896 29.5 % 126,891 28.5
% Asset impairment charges - - % - - % Operating
income 63,319 14.2 % 55,633 12.5 %
Nonoperating income, net 106 - % 142 - % Interest expense
(3,625) (0.8) % (2,741) (0.6) % Income before income taxes
59,800 13.5 % 53,034 11.9 % Income tax expense 2,188
0.5 % 6,256 1.4 % Net income $ 57,612 13.0 % $ 46,778 10.5 %
Diluted EPS $ 2.07 $ 1.63 Weighted average shares of
common stock used in computing diluted EPS 27,802 28,634
Nine Months Ended November 30, 2016
2015 Sales revenue, net $ 1,160,522 100.0 % $ 1,159,977
100.0 % Cost of goods sold 650,912 56.1 % 686,129
59.2 % Gross profit 509,610 43.9 % 473,848 40.8 % Selling,
general, and administrative expense ("SG&A") 378,506 32.6 %
356,240 30.7 % Asset impairment charges 7,400 0.6 %
3,000 0.3 % Operating income 123,704 10.7 % 114,608
9.9 % Nonoperating income, net 343 - % 233 - % Interest
expense (11,142) (1.0) % (8,135) (0.7) % Income
before income taxes 112,905 9.7 % 106,706 9.2 % Income tax
expense 7,912 0.7 % 15,066 1.3 % Net income $ 104,993
9.0 % $ 91,640 7.9 % Diluted EPS $ 3.74 $ 3.17
Weighted average shares of common stock used in computing diluted
EPS 28,058 28,903
HELEN OF TROY LIMITED AND SUBSIDIARIES Net Sales Revenue
by Segment (7) (Unaudited) (in thousands)
Three Months Ended November 30, % of Sales Revenue,
net 2016 2015 $ Change % Change
2016 2015 Sales revenue by segment, net Housewares $
124,723 $ 87,816 $ 36,907 42.0 % 28.1 % 19.7 % Health & Home
179,842 186,418 (6,576) (3.5) % 40.5 % 41.8 % Nutritional
Supplements 32,163 37,492 (5,329) (14.2) % 7.2 % 8.4 % Beauty
107,686 133,777 (26,091) (19.5) % 24.2 % 30.0
% Total sales revenue, net $ 444,414 $ 445,503 $ (1,089) (0.2) %
100.0 % 100.0 %
Nine Months Ended November 30,
% of Sales Revenue, net 2016 2015 $
Change % Change 2016 2015 Sales revenue by
segment, net Housewares $ 315,302 $ 231,850 $ 83,452 36.0 % 27.2 %
20.0 % Health & Home 470,650 472,714 (2,064) (0.4) % 40.6 %
40.8 % Nutritional Supplements 101,215 114,980 (13,765) (12.0) %
8.7 % 9.9 % Beauty 273,355 340,433 (67,078)
(19.7) % 23.6 % 29.3 % Total sales revenue, net $ 1,160,522 $
1,159,977 $ 545 0.0 % 100.0 % 100.0 %
HELEN
OF TROY LIMITED AND SUBSIDIARIES Selected Consolidated
Balance Sheet, Cash Flow and Liquidity Information
(Unaudited) (in thousands) November 30,
2016 2015 (a) Balance Sheet: Cash and cash
equivalents $ 16,780 $ 21,141 Receivables, net 289,943 288,979
Inventory, net 301,088 339,397 Total assets, current 620,062
659,702 Total assets 1,889,077 1,758,623 Total liabilities, current
327,503 292,832 Total long-term liabilities 581,696 497,859 Total
debt 564,902 470,425 Stockholders' equity 979,878 967,932
Cash Flow: Depreciation and amortization $ 33,323 $ 31,946 Net cash
provided by operating activities 139,140 73,748 Capital and
intangible asset expenditures 14,989 12,418 Payments to acquire
businesses, net of cash received 209,258 42,750 Net amounts
borrowed (repaid) (55,800) 41,500 Payments for repurchases of
common stock 75,000 50,000 Liquidity: Working Capital $
292,559 $ 366,870
_________________________
(a) As a result of the adoption of new accounting standards
for fiscal year 2017, amounts reported as of November 30, 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) (7) (Unaudited) (in
thousands) Three Months Ended November 30, 2016
Housewares Health & Home Nutritional
Supplements
Beauty Total Operating income, as reported (GAAP) $
29,223 23.4 % $ 20,155 11.2 % $ (80) (0.2) % $ 14,021 13.0 % $
63,319 14.2 % Non-cash share-based compensation (3) 671 0.5 % 872
0.5 % 369 1.1 % 991 0.9 % 2,903 0.7 % Amortization of intangible
assets (4) 658 0.5 % 3,546 2.0 % 1,571 4.9 %
1,424 1.3 % 7,199 1.6 % Adjusted operating income
(non-GAAP) $ 30,552 24.5 % $ 24,573 13.7 % $ 1,860 5.8 % $ 16,436
15.3 % $ 73,421 16.5 %
Three Months Ended November 30,
2015 Housewares Health & Home
Nutritional
Supplements
Beauty Total Operating income, as reported (GAAP) $
15,536 17.7 % $ 18,072 9.7 % $ 3,034 8.1 % $ 18,991 14.2 % $ 55,633
12.5 % CEO succession costs (2) 1,348 1.5 % 2,722 1.5
% 704 1.9 % 1,933 1.4 % 6,707 1.5 % Subtotal
16,884 19.2 % 20,794 11.2 % 3,738 10.0 % 20,924 15.6 % 62,340 14.0
% Non-cash share-based compensation (3) 303 0.3 % 657 0.4 % 398 1.1
% 851 0.6 % 2,209 0.5 % Amortization of intangible assets (4)
326 0.4 % 3,532 1.9 % 1,564 4.2 % 1,439
1.1 % 6,861 1.5 % Adjusted operating income (non-GAAP) $
17,513 19.9 % $ 24,983 13.4 % $ 5,700 15.2 % $ 23,214 17.4 % $
71,410 16.0 %
Nine Months Ended November 30, 2016
Housewares Health & Home Nutritional
Supplements
Beauty Total Operating income, as reported (GAAP) $
68,956 21.9 % $ 39,156 8.3 % $ (6,581) (6.5) % $ 22,173 8.1 % $
123,704 10.7 % Patent litigation charge (5) - - % 1,468 0.3 % - - %
- - % 1,468 0.1 % Asset impairment charges (6) - - %
- - % 5,000 4.9 % 2,400 0.9 % 7,400 0.6 %
Subtotal 68,956 21.9 % 40,624 8.6 % (1,581) (1.6) % 24,573 9.0 %
132,572 11.4 % Non-cash share-based compensation (3) 2,404 0.8 %
3,787 0.8 % 1,734 1.7 % 3,736 1.4 % 11,661 1.0 % Amortization of
intangible assets (4) 1,986 0.6 % 10,626 2.3 %
4,713 4.7 % 4,300 1.6 % 21,625 1.9 % Adjusted
operating income (non-GAAP) $ 73,346 23.3 % $ 55,037 11.7 % $ 4,866
4.8 % $ 32,609 11.9 % $ 165,858 14.3 %
Nine Months Ended
November 30, 2015 Housewares Health & Home
Nutritional
Supplements
Beauty Total Operating income, as reported (GAAP) $
41,861 18.1 % $ 31,298 6.6 % $ 8,623 7.5 % $ 32,826 9.6 % $ 114,608
9.9 % CEO succession costs (2) 1,348 0.6 % 2,722 0.6 % 704 0.6 %
1,933 0.6 % 6,707 0.6 % Asset impairment charges (6) - - %
- - % - - % 3,000 0.9 % 3,000 0.3 %
Subtotal 43,209 18.6 % 34,020 7.2 % 9,327 8.1 % 37,759 11.1 %
124,315 10.7 % Non-cash share-based compensation (3) 934 0.4 %
1,785 0.4 % 974 0.8 % 2,454 0.7 % 6,147 0.5 % Amortization of
intangible assets (4) 976 0.4 % 10,900 2.3 %
4,692 4.1 % 4,315 1.3 % 20,883 1.8 % Adjusted
operating income (non-GAAP) $ 45,119 19.5 % $ 46,705 9.9 % $ 14,993
13.0 % $ 44,528 13.1 % $ 151,345 13.0 %
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,
2016 2015 2016 2015 Net income
(GAAP) $ 57,612 $ 46,778 $ 104,993 $ 91,640 Interest
expense, net 3,604 2,698 11,052 8,066 Income tax expense
2,188 6,256 7,912 15,066 Depreciation and amortization,
excluding amortized interest 11,225 10,719
33,323 31,946 EBITDA 74,629 66,451 157,280 146,718
Add: CEO succession costs (2) - 6,707 - 6,707
Non-cash share-based compensation (3) 2,903 2,209 11,661 6,147
Patent litigation charge (5) - - 1,468 - Non-cash
asset impairment charges (6) - - 7,400
3,000 Adjusted EBITDA (non-GAAP) $ 77,532 $ 75,367 $ 177,809
$ 162,572
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,
2016 Housewares
Health & Home
Nutritional Supplements
Beauty Total Operating Income (GAAP) $
29,223 $ 20,155 $ (80) $ 14,021 $ 63,319 Depreciation and
amortization, excluding amortized interest 1,429 5,221 2,108 2,467
11,225 Nonoperating income, net - - -
85 85 EBITDA 30,652 25,376 2,028 16,573 74,629
Add: Non-cash share-based compensation (3) 671
872 369 991 2,903 Adjusted EBITDA
(non-GAAP) $ 31,323 $ 26,248 $ 2,397 $ 17,564 $ 77,532
Three Months Ended November 30, 2015
Housewares
Health & Home
Nutritional Supplements
Beauty Total Operating Income (GAAP) $ 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 Nonoperating income, net - - -
99 99 EBITDA 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
(non-GAAP) $ 18,252 $ 26,732 $ 6,092 $ 24,291 $ 75,367
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, 2016 Housewares
Health & Home
Nutritional Supplements
Beauty Total Operating income (GAAP) $
68,956 $ 39,156 $ (6,581) $ 22,173 $ 123,704 Depreciation
and amortization, excluding amortized interest 4,200 15,738 6,242
7,143 33,323 Nonoperating income, net - -
- 253 253 EBITDA 73,156 54,894 (339)
29,569 157,280 Add: Non-cash share-based compensation (3)
2,404 3,787 1,734 3,736 11,661 Patent litigation charge (5)
- 1,468 - - 1,468 Non-cash asset impairment charges (6)
- - 5,000 2,400 7,400
Adjusted EBITDA (non-GAAP) $ 75,560 $ 60,149 $ 6,395 $ 35,705 $
177,809
Nine Months Ended November 30, 2015
Housewares
Health & Home
Nutritional Supplements
Beauty Total Operating income (GAAP) $ 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 Nonoperating income, net - - -
164 164 EBITDA 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
(non-GAAP) $ 47,291 $ 51,663 $ 16,190 $ 47,428 $ 162,572
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)
(Unaudited) (dollars in thousands, except per share
data) Three Months Ended November 30, Basic
EPS Diluted EPS 2016 2015
2016 2015 2016 2015 Net income as
reported (GAAP) $ 57,612 $ 46,778 $ 2.10 $ 1.66 $ 2.07 $ 1.63 CEO
succession costs, net of tax (2) - 4,645 -
0.17 - 0.16 Subtotal 57,612 51,423 2.10 1.83
2.07 1.80 Non-cash share-based compensation, net of tax (3) 2,197
1,813 0.08 0.06 0.08 0.06 Amortization of intangible assets, net of
tax (4) 6,190 5,936 0.23 0.22
0.22 0.21 Adjusted income (non-GAAP) $ 65,999 $ 59,172 $
2.40 $ 2.10 $ 2.37 $ 2.07
Weighted average shares of common stock
used in computing basic and diluted EPS
27,484 28,129 27,802 28,634
Nine Months Ended November 30, Basic EPS Diluted
EPS 2016 2015 2016 2015 2016
2015 Net income as reported (GAAP) $ 104,993 $ 91,640 $ 3.79
$ 3.23 $ 3.74 $ 3.17 CEO succession costs, net of tax (2) - 4,645 -
0.16 - 0.16 Patent litigation charge, net of tax (5) 1,464 - 0.05 -
0.05 - Asset impairment charges, net of tax (6) 5,097
2,656 0.18 0.09 0.18 0.09 Subtotal
111,554 98,941 4.03 3.49 3.98 3.42 Non-cash share-based
compensation, net of tax (3) 8,741 5,158 0.32 0.18 0.31 0.18
Amortization of intangible assets, net of tax (4) 18,620
18,108 0.67 0.64 0.66 0.63
Adjusted income (non-GAAP) $ 138,915 $ 122,207 $ 5.01 $ 4.31 $ 4.95
$ 4.23
Weighted average shares of common stock
used in computing basic and diluted EPS
27,700 28,361 28,058 28,903
HELEN OF TROY
LIMITED AND SUBSIDIARIES Reconciliation of Fiscal Year 2017
Outlook for GAAP Diluted EPS to Adjusted Diluted EPS
(non-GAAP) (1) (8) (9) (Unaudited) Fiscal Year
Ended February 28, 2017
Nine Months Ended November 30,
2016
Outlook for the Balance of
the Fiscal Year (Three Months)
Outlook for the Fiscal Year
(Twelve Months)
Diluted EPS, as reported (GAAP) $ 3.74 $ 0.97 - $ 1.17 $ 4.72 - $
4.92 Patent litigation charge, net of tax (5) 0.05 - - - 0.05 -
0.05 Asset impairment charges, net of tax (6) 0.18 -
- - 0.18 - 0.18
Subtotal 3.98 0.97 - 1.17 4.95 - 5.15 Non-cash share-based
compensation, net of tax (3) 0.31 0.09 - 0.13 0.40 - 0.44
Amortization of intangible assets, net of tax (4) 0.66
0.19 - 0.25 0.85 -
0.91 Adjusted diluted EPS (non-GAAP) $ 4.95 $ 1.25 -
$ 1.55 $ 6.20 - $ 6.50
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 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 for
the three- and nine-months ended November 30, 2015.
(3) Adjustments consist of non-cash share-based compensation
expense of $2.90 million ($2.12 million after tax) and $2.21
million ($1.81 million after tax) for the three months ended
November 30, 2016 and 2015, respectively, and $11.66 million ($8.74
million after tax) and $6.15 million ($5.16 million after tax), for
the nine months ended November 30, 2016 and 2015, respectively.
(4) Adjustments consist of non-cash intangible asset
amortization expense of $7.20 million ($6.19 million after tax) and
$6.86 million ($5.94 million after tax) for the three months ended
November 30, 2016 and 2015, respectively, and $21.63 million
($18.62 million after tax) and $20.88 million ($18.11 million after
tax) for the nine months ended November 30, 2016 and 2015,
respectively. (5) Adjustment consists of a patent litigation
charge of $1.47 million ($1.46 million after tax) for the nine
months ended November 30, 2016. (6) 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 nine
months ended November 30, 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. (7) The VapoSteam business was acquired on
March 31, 2015 and its operations are reported in the Health &
Home segment. Results reported for the nine months ended November
30, 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 nine-months ended November 30, 2016 include three months and
approximately eight and a half months of operating results,
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,
(In thousands) 2016 2015 2016
2015 CEO succession costs (2) $ - $ (2,062) $ - $ (2,062)
Non-cash share-based compensation (3) (706) (396) (2,920) (989)
Amortization of intangible assets (4) (1,009) (925) (3,005) (2,775)
Patent litigation charge (5) - - (4) - Asset impairment charges (6)
- - (2,303) (344) Total $ (1,715) $
(3,383) $ (8,232) $ (6,170) (9) The diluted EPS
outlook is based on an estimated weighted average shares
outstanding of 28.00 million for fiscal year 2017.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170105006385/en/
Investors:ICR, Inc.Allison Malkin, 203-682-8200
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