Consolidated Net Sales Growth of 5.2%; Core
Business Net Sales Growth of 5.7% GAAP Diluted Earnings Per
Share ("EPS") from Continuing Operations of $1.83 Adjusted
Diluted EPS from Continuing Operations of $2.24; Growth of
13.1% Raises Fiscal 2020 GAAP Diluted EPS from Continuing
Operations Outlook to $6.84 - $7.04 Raises Fiscal 2020
Adjusted Diluted EPS from Continuing Operations Outlook to $8.50 -
$8.75 Raises Fiscal 2020 Consolidated Net Sales Growth
Outlook to 2.9% - 4.8%
Helen of Troy Limited (NASDAQ: HELE), designer, developer
and worldwide marketer of consumer brand-name housewares, health
and home and beauty products, today reported results for the
three-month period ended August 31, 2019. Following the divestiture
of Healthy Directions on December 20, 2017, the Company no longer
consolidates the Nutritional Supplements segment’s operating
results. That former segment’s operating results are included in
the Company’s financial statements and classified as discontinued
operations for all periods presented.
Executive Summary – Second Quarter of
Fiscal 2020
- Consolidated net sales revenue increase of 5.2%, including:
- An increase in Leadership Brand net sales of 3.8%
- An increase in online channel net sales of approximately
25%
- Core business growth of 5.7%
- GAAP operating income of $54.5 million, or 13.2% of net sales,
which includes pre-tax restructuring charges of $0.4 million,
compared to GAAP operating income of $50.7 million, or 12.9% of net
sales, for the same period last year, which included pre-tax
restructuring charges of $0.9 million
- Non-GAAP adjusted operating income increase of 10.4% to $65.8
million, or 15.9% of net sales, compared to $59.6 million, or 15.1%
of net sales, for the same period last year
- GAAP diluted EPS from continuing operations of $1.83, which
includes an after-tax restructuring charge of $0.01 per share,
compared to GAAP diluted EPS of $1.66 for the same period last
year, which included an after-tax restructuring charge of $0.03 per
share
- Non-GAAP adjusted diluted EPS from continuing operations
increase of 13.1% to $2.24, compared to $1.98 for the same period
last year
Julien R. Mininberg, Chief Executive Officer, stated: "We are
pleased with our second quarter financial performance, which
delivered consolidated core business sales growth of 5.7% and
adjusted diluted EPS growth of 13.1%, both ahead of our
expectations. During the quarter, we improved our consolidated
operating margin, while simultaneously increasing our growth
investments compared to our original outlook at the beginning of
the year. These growth investments are generating healthy results
and our digital initiatives continue to pay dividends, illustrated
by online sales growth of 25%, which now represents 24% of total
sales in the quarter. Consolidated sales growth was led by our
Housewares segment as we expanded distribution and introduced new
products that resonated well with both customers and consumers. Our
Beauty segment continued to grow, driven by strong demand in the
appliance category. Our Health & Home segment faced a
particularly difficult comparison to the high base that included
strong sales of seasonal products, distribution gains and
significant international growth in the same period last year.
Overall, a strong quarter and first half of our fiscal year.”
Mr. Mininberg continued: “Based on this performance and our
expectations for the remainder of the fiscal year, we are pleased
to raise our net sales and adjusted diluted EPS outlook for the
full fiscal year 2020. We believe we are well positioned to
continue driving meaningful long-term shareholder value as we
execute our Phase II Transformation plan."
Three Months Ended August
31,
Housewares
Health & Home
Beauty
Total
Fiscal 2019 sales revenue, net
$
137,498
$
175,783
$
80,267
$
393,548
Core business growth (decline)
30,837
(15,943
)
7,494
22,388
Impact of foreign currency
(471
)
(1,050
)
(420
)
(1,941
)
Change in sales revenue, net
30,366
(16,993
)
7,074
20,447
Fiscal 2020 sales revenue, net
$
167,864
$
158,790
$
87,341
$
413,995
Total net sales revenue growth
(decline)
22.1
%
(9.7
)%
8.8
%
5.2
%
Core business growth (decline)
22.4
%
(9.1
)%
9.3
%
5.7
%
Impact of foreign currency
(0.3
)%
(0.6
)%
(0.5
)%
(0.5
)%
Operating margin (GAAP)
Fiscal 2020
21.3
%
7.8
%
7.3
%
13.2
%
Fiscal 2019
20.6
%
7.8
%
10.8
%
12.9
%
Adjusted operating margin (non-GAAP)
Fiscal 2020
22.4
%
11.2
%
11.9
%
15.9
%
Fiscal 2019
22.4
%
10.5
%
12.8
%
15.1
%
Consolidated Operating Results - Second
Quarter Fiscal 2020 Compared to Second Quarter Fiscal
2019
- Consolidated net sales revenue increased 5.2% to $414.0 million
compared to $393.5 million, driven by a core business increase of
$22.4 million, or 5.7%, primarily reflecting an increase in brick
and mortar sales in the Housewares segment, growth in consolidated
online sales, and an increase in sales in the appliance category in
the Beauty segment. These factors were partially offset by lower
sales in the Health & Home segment, the unfavorable impact from
foreign currency fluctuations of approximately $1.9 million, or
0.5%, and a decline in the personal care category within the Beauty
segment.
- Consolidated gross profit margin increased 3.6 percentage
points to 43.0%, compared to 39.4%. The increase is primarily due
to a higher mix of Housewares revenue at a higher overall gross
profit margin, tariff exclusion refunds received for certain duties
expensed in the second half of fiscal 2019 and the first quarter of
2020, and a lower mix of shipments made on a direct import basis.
These factors were partially offset by the net margin dilutive
impact from tariffs and related pricing actions, unfavorable
foreign currency fluctuations, a lower mix of personal care sales,
and higher inbound freight expense.
- Consolidated SG&A as a percentage of sales increased by 3.5
percentage points to 29.8% of net sales compared to 26.3%. The
increase is primarily due to higher annual incentive and
share-based compensation expense related to short- and long-term
performance, the unfavorable impact of a lower mix of shipments
made on a direct import basis, higher outbound freight expense,
higher advertising and new product development expense, and higher
amortization expense. These factors were partially offset by the
impact from tariff related pricing actions taken with retail
customers, the impact that higher overall sales had on net
operating leverage, and the favorable impact from foreign currency
exchange and forward contract settlements.
- Consolidated operating income was $54.5 million, or 13.2% of
net sales, compared to $50.7 million, or 12.9% of net sales. The
increase in consolidated operating margin primarily reflects tariff
exclusion refunds received for certain duties expensed in the
second half of fiscal 2019 and the first quarter of 2020, a higher
mix of Housewares sales at a higher overall operating margin, the
impact of favorable foreign currency exchange contracts and
remeasurement on SG&A, the favorable impact that higher overall
net sales had on operating expense leverage, and the net favorable
comparative impact of pre-tax restructuring charges of $0.4
million. These factors were partially offset by higher annual
incentive and share-based compensation expense related to short-
and long-term performance, higher advertising and new product
development expense, higher amortization expense, higher freight
and distribution expense, and the impact of unfavorable foreign
currency fluctuations on net sales and operating margin.
- The effective tax rate was 10.3%, compared to 8.3% for the same
period last year. The year-over-year increase in the effective tax
rate is primarily due to shifts in the mix of taxable income in the
Company's various tax jurisdictions and increases in certain
statutory tax rates.
- Income from continuing operations was $46.1 million, or $1.83
per diluted share on 25.2 million weighted average shares
outstanding, compared to $44.0 million, or $1.66 per diluted share
on 26.6 million weighted average diluted shares outstanding. Income
from continuing operations for the second quarter of fiscal 2020
includes after-tax restructuring charges of $0.4 million or $0.01
per share, compared to $0.8 million or $0.03 per share in the same
period last year.
- Adjusted EBITDA increased 9.7% to $69.8 million compared to
$63.6 million.
On an adjusted basis for the second quarters of fiscal 2020 and
2019, excluding restructuring charges, non‐cash share-based
compensation, and non-cash amortization of intangible assets, as
applicable:
- Adjusted operating income increased $6.2 million, or 10.4%, to
$65.8 million, or 15.9% of net sales, compared to $59.6 million, or
15.1% of net sales. The 0.8 percentage point increase in adjusted
operating margin primarily reflects tariff exclusion refunds
received for certain duties expensed in the second half of fiscal
2019 and the first quarter of 2020, a higher mix of Housewares
sales at a higher overall operating margin, the impact of favorable
foreign currency exchange contracts and remeasurement on SG&A,
and the favorable impact that higher overall net sales had on
operating expense leverage. These factors were partially offset by
higher annual incentive compensation expense, higher advertising
and new product development expense, higher freight and
distribution expense, and the impact of unfavorable foreign
currency fluctuations on net sales and operating margin.
- Adjusted income from continuing operations increased $4.0
million, or 7.6%, to $56.5 million, or $2.24 per diluted share,
compared to $52.5 million, or $1.98 per diluted share. The 13.1%
increase in adjusted diluted EPS from continuing operations was
primarily due to higher adjusted operating income from the
Housewares segment and the impact of lower weighted average diluted
shares outstanding compared to the same period last year. This was
partially offset by lower adjusted operating income from the Health
& Home and Beauty segments, higher interest expense, and higher
income tax expense.
Segment Operating Results - Second
Quarter Fiscal 2020 Compared to Second Quarter Fiscal
2019
Housewares net sales increased by 22.1%, or $30.4 million,
primarily due to point of sale growth and incremental distribution
with existing domestic brick and mortar customers, an increase in
online sales, an increase in international sales, and new product
introductions. These factors were partially offset by the
unfavorable impact of net foreign currency fluctuations of
approximately $0.5 million, or 0.3%. Operating margin was 21.3%
compared to 20.6%. The 0.7 percentage point increase was primarily
due to the margin impact of a more favorable product and channel
mix and the impact that higher sales had on operating leverage.
These factors were partially offset by higher annual incentive and
share-based compensation expense related to short- and long-term
performance, higher new product development expense, and higher
freight and distribution center expense to support increased volume
and integration activity. Housewares adjusted operating income
increased 22.1% to $37.6 million, compared to $30.8 million.
Housewares adjusted operating margin was 22.4% for both
periods.
Health & Home net sales decreased 9.7% or $17.0 million,
reflecting the unfavorable comparison to core business growth of
20.3% in the same period last year. The decline this quarter
included the timing of seasonal shipments, less wildfire activity
in the current year, and net distribution changes year-over-year.
Segment operating margin was flat to the prior year period due to
the unfavorable impacts from higher media advertising expense,
unfavorable operating leverage from the decline in sales, higher
share-based compensation expense, the margin impact of a less
favorable channel mix, and the impact of unfavorable foreign
currency exchange fluctuations on net sales and operating margin.
These factors were offset by tariff exclusion refunds received for
certain duties expensed in the second half of fiscal 2019 and the
first quarter of fiscal 2020, and the impact of favorable foreign
currency exchange contracts and remeasurement on SG&A. Health
& Home adjusted operating income decreased 4.1% to $17.7
million, or 11.2% of segment net sales, compared to $18.5 million,
or 10.5% of segment net sales, in the same period last year.
Beauty net sales increased 8.8%, or $7.1 million, primarily due
to strong demand and new product introductions in the appliance
category, growth in the online channel, and an increase in
international sales. These factors were partially offset by a
decrease in brick and mortar sales, a decline in the personal care
category, and the unfavorable impact of net foreign currency
fluctuations of approximately $0.4 million, or 0.5%. Operating
margin was 7.3% compared to 10.8%. The decrease is primarily due to
the impact of higher freight expense to meet strong demand in the
appliance category, higher annual incentive and share-based
compensation expense related to short- and long-term performance,
higher amortization expense, the margin impact of a less favorable
product and channel mix, and the impact of unfavorable foreign
currency fluctuations on net sales and operating margin. These
factors were partially offset by lower advertising expense and the
net favorable comparative impact of pre-tax restructuring charges
of $0.4 million. Beauty adjusted operating income increased 1.3% to
$10.4 million, or 11.9% of segment net sales, compared to $10.3
million, or 12.8% of segment net sales, in the same period last
year.
Balance Sheet and Cash Flow Highlights
- Second Quarter Fiscal 2020 Compared to Second Quarter Fiscal
2019
- Cash and cash equivalents totaled $17.0 million, compared to
$19.9 million
- Total short- and long-term debt was $301.2 million, compared to
$301.1 million, a net increase of $0.1 million
- Accounts receivable turnover was 68.4 days, compared to 65.4
days
- Inventory was $370.9 million, compared to $284.8 million.
Trailing twelve-month inventory turnover was 2.9 times compared to
3.3 times.
- Net cash provided by operating activities from continuing
operations for the first six months of the fiscal year increased
$0.9 million to $38.2 million.
Fiscal 2020 Annual
Outlook
For fiscal 2020, the Company has updated its outlook and now
expects consolidated net sales revenue to be in the range of $1.610
to $1.640 billion, which implies consolidated sales growth of 2.9%
to 4.8% compared to the prior expectation of 1.7% to 3.6%. By
segment, the outlook reflects:
- Housewares net sales growth of 13% to 15%, compared to the
prior expectation of 6% to 8%;
- Health & Home net sales decline in the low-single digits,
compared to the prior expectation of net sales growth of 2% to 3%;
and
- Beauty net sales growth in the low-single digits, compared to
the prior expectation of a net sales decline in the low-single
digits.
The Company now expects consolidated GAAP diluted EPS from
continuing operations of $6.84 to $7.04, and non-GAAP adjusted
diluted EPS from continuing operations in the range of $8.50 to
$8.75, which excludes any asset impairment charges, restructuring
charges, share-based compensation expense and intangible asset
amortization expense.
The Company’s net sales and EPS outlook assumes the severity of
the upcoming cough/cold/flu season will be in line with historical
averages. The Company’s net sales and EPS outlook also assumes that
September 2019 foreign currency exchange rates will remain constant
for the remainder of the fiscal year. The Company now expects the
year-over-year comparison of adjusted diluted EPS from continuing
operations to be impacted by an expected increase in growth
investments of 13% to 18% in fiscal 2020. The diluted EPS outlook
is based on an estimated weighted average diluted shares
outstanding of 25.3 million.
The increase in the adjusted diluted EPS outlook for fiscal 2020
reflects the Company's strong performance in the second quarter,
partially offset by an expected increase in growth investments,
higher expected annual incentive compensation expense, and higher
expected freight and distribution costs. These costs support strong
demand in our Housewares segment and Beauty appliances business, as
well as integration activity and increases in capacity and
throughput for future growth.
The Company now expects a reported GAAP effective tax rate range
of 9.6% to 10.7%, and an adjusted effective tax rate range of 9.0%
to 10.0% for the full fiscal year 2020. Please refer to the
schedule entitled “Effective Tax Rate (GAAP) and Adjusted Effective
Tax Rate (Non-GAAP)” in the accompanying tables to this press
release.
The likelihood and potential impact of any fiscal 2020
acquisitions and divestitures, future asset impairment charges,
future foreign currency fluctuations, further tariff increases, or
future 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 9:00 a.m.
Eastern Time today, Tuesday, October 8, 2019. Investors and
analysts interested in participating in the call are invited to
dial (877) 407-3982 approximately ten minutes prior to the start of
the call. The conference call will also be webcast live at:
http://investor.hotus.com/. A telephone replay of this call will be
available at 12:00 p.m. Eastern Time on October 8, 2019 until 11:59
p.m. Eastern Time on October 15, 2019 and can be accessed by
dialing (844) 512-2921 and entering replay pin number 13694424. A
replay of the webcast will remain available on the website for one
year.
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 such as adjusted operating income,
adjusted operating margin, adjusted effective tax rate, adjusted
income, adjusted diluted earnings per share, 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
condensed consolidated statements of income. All references to the
Company's continuing operations exclude the Nutritional Supplements
segment.
About Helen of Troy
Limited
Helen of Troy Limited (NASDAQ: 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, Hydro Flask, Vicks, Braun,
Honeywell, PUR, and Hot Tools. 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
http://investor.hotus.com/
Forward Looking Statements
Certain written and oral statements made by the Company and
subsidiaries of the 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 the Company
expects or anticipates 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 its
current expectations and various assumptions. The Company believes
there is a reasonable basis for these expectations and assumptions,
but there can be no assurance that the Company will realize these
expectations or that these assumptions will prove correct.
Forward-looking statements are subject to risks that could cause
them to differ materially from actual results. Accordingly, the
Company cautions 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 28, 2019, and in
the Company's other filings with the SEC. Investors are urged to
refer to the risk factors referred to above for a description of
these risks. Such risks include, among others, the Company's
ability to deliver products to its customers in a timely manner and
according to their fulfillment standards, the costs of complying
with the business demands and requirements of large sophisticated
customers, the Company's relationships with key customers and
licensors, its dependence on the strength of retail economies and
vulnerabilities to any prolonged economic downturn, its dependence
on sales to several large customers and the risks associated with
any loss or substantial decline in sales to top customers,
expectations regarding any proposed restructurings, its recent and
future acquisitions or divestitures, including its ability to
realize anticipated cost savings, synergies and other benefits
along with its ability to effectively integrate acquired businesses
or separate divested businesses, circumstances which may contribute
to future impairment of goodwill, intangible or other long-lived
assets, the retention and recruitment of key personnel, foreign
currency exchange rate fluctuations, risks associated with weather
conditions, the duration and severity of the cold and flu season
and other related factors, its 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, labor and energy on cost of
goods sold and certain operating expenses, the risks associated
with significant tariffs or other restrictions on imports from
China or any retaliatory trade measures taken by China, the
geographic concentration and peak season capacity of certain U.S.
distribution facilities increases its exposure to significant
shipping disruptions and added shipping and storage costs, its
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, the risks associated with
the use of trademarks licensed from and to third parties, its
ability to develop and introduce a continuing stream of new
products to meet changing consumer preferences, trade barriers,
exchange controls, expropriations, and other risks associated with
U.S. and foreign operations, the risks to its liquidity as a result
of changes to capital and credit market conditions, limitations
under its financing arrangements and other constraints or events
that impose constraints on its cash resources and ability to
operate its business, the costs, complexity and challenges of
upgrading and managing its global information systems, the risks
associated with cybersecurity and information security breaches,
the risks associated with global legal developments regarding
privacy and data security could result in changes to our business
practices, penalties, increased cost of operations, or otherwise
harm our business, the risks associated with product recalls,
product liability, other claims, and related litigation against us,
the risks associated with accounting for tax positions, tax audits
and related disputes with taxing authorities, the risks of
potential changes in laws in the U.S. or abroad, including tax
laws, regulations or treaties, employment and health insurance laws
and regulations, and laws relating to environmental policy,
personal data, financial regulation, transportation policy and
infrastructure policy along with the costs and complexities of
compliance with such laws, its ability to continue to avoid
classification as a controlled foreign corporation, and legislation
enacted in Bermuda and Barbados in response to the European Union’s
review of harmful tax competition could adversely affect our
operations. The Company undertakes 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
Condensed Consolidated
Statements of Income
(Unaudited)
(in thousands, except per
share data)
Three Months Ended August
31,
2019
2018
Sales revenue, net
$
413,995
100.0
%
$
393,548
100.0
%
Cost of goods sold
235,844
57.0
%
238,375
60.6
%
Gross profit
178,151
43.0
%
155,173
39.4
%
Selling, general and administrative
expense ("SG&A")
123,201
29.8
%
103,654
26.3
%
Restructuring charges
430
0.1
%
859
0.2
%
Operating income
54,520
13.2
%
50,660
12.9
%
Nonoperating income, net
89
—
%
85
—
%
Interest expense
(3,216
)
(0.8
)%
(2,755
)
(0.7
)%
Income before income tax
51,393
12.4
%
47,990
12.2
%
Income tax expense
5,298
1.3
%
3,973
1.0
%
Income from continuing operations
46,095
11.1
%
44,017
11.2
%
Loss from discontinued operations, net of
tax
—
—
%
—
—
%
Net income
$
46,095
11.1
%
$
44,017
11.2
%
Earnings per share - diluted:
Continuing operations
$
1.83
$
1.66
Discontinued operations
—
—
Total earnings per share - diluted
$
1.83
$
1.66
Weighted average shares of common stock
used in computing diluted earnings per share
25,245
26,557
Six Months Ended August
31,
2019
2018
Sales revenue, net
$
790,330
100.0
%
$
748,227
100.0
%
Cost of goods sold
458,452
58.0
%
446,496
59.7
%
Gross profit
331,878
42.0
%
301,731
40.3
%
SG&A
229,102
29.0
%
205,160
27.4
%
Restructuring charges
1,049
0.1
%
2,584
0.3
%
Operating income
101,727
12.9
%
93,987
12.6
%
Nonoperating income, net
221
—
%
160
—
%
Interest expense
(6,524
)
(0.8
)%
(5,442
)
(0.7
)%
Income before income tax
95,424
12.1
%
88,705
11.9
%
Income tax expense
8,635
1.1
%
6,515
0.9
%
Income from continuing operations
86,789
11.0
%
82,190
11.0
%
Loss from discontinued operations, net of
tax
—
—
%
(381
)
(0.1
)%
Net income
$
86,789
11.0
%
$
81,809
10.9
%
Earnings (loss) per share - diluted:
Continuing operations
$
3.44
$
3.09
Discontinued operations
—
(0.01
)
Total earnings per share - diluted
$
3.44
$
3.07
Weighted average shares of common stock
used in computing diluted earnings per share
25,245
26,612
Condensed Consolidated
Statements of Income and Reconciliation of Non-GAAP
Financial
Measures – Adjusted Operating
Income, Adjusted Income from Continuing Operations and
Adjusted Diluted Earnings Per
Share (“EPS”) from Continuing Operations (1)
(Unaudited)
(in thousands, except per
share data)
Three Months Ended August 31,
2019
As Reported
(GAAP)
Adjustments
Adjusted
(Non-GAAP)
Sales revenue, net
$
413,995
100.0
%
$
—
$
413,995
100.0
%
Cost of goods sold
235,844
57.0
%
—
235,844
57.0
%
Gross profit
178,151
43.0
%
—
178,151
43.0
%
SG&A
123,201
29.8
%
(4,463
)
(3)
112,357
27.1
%
(6,381
)
(4)
Restructuring charges
430
0.1
%
(430
)
—
—
%
Operating income
54,520
13.2
%
11,274
65,794
15.9
%
Nonoperating income, net
89
—
%
—
89
—
%
Interest expense
(3,216
)
(0.8
)%
—
(3,216
)
(0.8
)%
Income before income tax
51,393
12.4
%
11,274
62,667
15.1
%
Income tax expense
5,298
1.3
%
829
6,127
1.5
%
Income from continuing operations
46,095
11.1
%
10,445
56,540
13.7
%
Diluted EPS from continuing operations
$
1.83
$
0.41
$
2.24
Weighted average shares of common stock
used in computing diluted EPS
25,245
25,245
Three Months Ended August 31,
2018
As Reported
(GAAP)
Adjustments
Adjusted
(Non-GAAP)
Sales revenue, net
$
393,548
100.0
%
$
—
$
393,548
100.0
%
Cost of goods sold
238,375
60.6
%
—
238,375
60.6
%
Gross profit
155,173
39.4
%
—
155,173
39.4
%
SG&A
103,654
26.3
%
(3,401
)
(3)
95,563
24.3
%
(4,689
)
(4)
Restructuring charges
859
0.2
%
(859
)
—
—
%
Operating income
50,660
12.9
%
8,949
59,610
15.1
%
Nonoperating income, net
85
—
%
—
85
—
%
Interest expense
(2,755
)
(0.7
)%
—
(2,755
)
(0.7
)%
Income before income tax
47,990
12.2
%
8,949
56,940
14.5
%
Income tax expense
3,973
1.0
%
434
4,407
1.1
%
Income from continuing operations
44,017
11.2
%
8,515
52,533
13.3
%
Diluted EPS from continuing operations
$
1.66
$
0.32
$
1.98
Weighted average shares of common stock
used in computing diluted EPS
26,557
26,557
Condensed Consolidated
Statements of Income and Reconciliation of Non-GAAP
Financial
Measures – Adjusted Operating
Income, Adjusted Income from Continuing Operations and
Adjusted Diluted Earnings Per
Share (“EPS”) from Continuing Operations (1)
(Unaudited)
(in thousands, except per
share data)
Six Months Ended August 31,
2019
As Reported
(GAAP)
Adjustments
Adjusted
(Non-GAAP)
Sales revenue, net
$
790,330
100.0
%
$
—
$
790,330
100.0
%
Cost of goods sold
458,452
58.0
%
—
458,452
58.0
%
Gross profit
331,878
42.0
%
—
331,878
42.0
%
SG&A
229,102
29.0
%
(8,339
)
(3)
206,778
26.2
%
(13,985
)
(4)
Restructuring charges
1,049
0.1
%
(1,049
)
—
—
%
Operating income
101,727
12.9
%
23,373
125,100
15.8
%
Nonoperating income, net
221
—
%
—
221
—
%
Interest expense
(6,524
)
(0.8
)%
—
(6,524
)
(0.8
)%
Income before income tax
95,424
12.1
%
23,373
118,797
15.0
%
Income tax expense
8,635
1.1
%
1,528
10,163
1.3
%
Income from continuing operations
86,789
11.0
%
21,845
108,634
13.7
%
Diluted EPS from continuing operations
$
3.44
$
0.87
$
4.30
Weighted average shares of common stock
used in computing diluted EPS
25,245
25,245
Six Months Ended August 31,
2018
As Reported
(GAAP)
Adjustments
Adjusted
(Non-GAAP)
Sales revenue, net
$
748,227
100.0
%
$
—
$
748,227
100.0
%
Cost of goods sold
446,496
59.7
%
—
446,496
59.7
%
Gross profit
301,731
40.3
%
—
301,731
40.3
%
SG&A
205,160
27.4
%
(7,522
)
(3)
186,625
24.9
%
(11,013
)
(4)
Restructuring charges
2,584
0.3
%
(2,584
)
—
—
%
Operating income
93,987
12.6
%
21,119
115,106
15.4
%
Nonoperating income, net
160
—
%
—
160
—
%
Interest expense
(5,442
)
(0.7
)%
—
(5,442
)
(0.7
)%
Income before income tax
88,705
11.9
%
21,119
109,824
14.7
%
Income tax expense
6,515
0.9
%
979
7,494
1.0
%
Income from continuing operations
82,190
11.0
%
20,140
102,330
13.7
%
Diluted EPS from continuing operations
$
3.09
$
0.76
$
3.85
Weighted average shares of common stock
used in computing diluted EPS
26,612
26,612
Consolidated and Segment Net
Sales, Operating Margin and Adjusted Operating Margin (non-GAAP)
(1)
(Unaudited)
(in thousands)
Three Months Ended August
31,
Housewares
Health & Home
Beauty
Total
Fiscal 2019 sales revenue, net
$
137,498
$
175,783
$
80,267
$
393,548
Core business growth (decline)
30,837
(15,943
)
7,494
22,388
Impact of foreign currency
(471
)
(1,050
)
(420
)
(1,941
)
Change in sales revenue, net
30,366
(16,993
)
7,074
20,447
Fiscal 2020 sales revenue, net
$
167,864
$
158,790
$
87,341
$
413,995
Total net sales revenue growth
(decline)
22.1
%
(9.7
)%
8.8
%
5.2
%
Core business growth (decline)
22.4
%
(9.1
)%
9.3
%
5.7
%
Impact of foreign currency
(0.3
)%
(0.6
)%
(0.5
)%
(0.5
)%
Operating margin (GAAP)
Fiscal 2020
21.3
%
7.8
%
7.3
%
13.2
%
Fiscal 2019
20.6
%
7.8
%
10.8
%
12.9
%
Adjusted operating margin (non-GAAP)
Fiscal 2020
22.4
%
11.2
%
11.9
%
15.9
%
Fiscal 2019
22.4
%
10.5
%
12.8
%
15.1
%
Six Months Ended August
31,
Housewares
Health & Home
Beauty
Total
Fiscal 2019 sales revenue, net
$
254,801
$
339,214
$
154,212
$
748,227
Core business growth (decline)
58,767
(22,536
)
10,334
46,565
Impact of foreign currency
(762
)
(2,945
)
(755
)
(4,462
)
Change in sales revenue, net
58,005
(25,481
)
9,579
42,103
Fiscal 2020 sales revenue, net
$
312,806
$
313,733
$
163,791
$
790,330
Total net sales revenue growth
(decline)
22.8
%
(7.5
)%
6.2
%
5.6
%
Core business growth (decline)
23.1
%
(6.6
)%
6.7
%
6.2
%
Impact of foreign currency
(0.3
)%
(0.9
)%
(0.5
)%
(0.6
)%
Operating margin (GAAP)
Fiscal 2020
21.4
%
8.8
%
4.5
%
12.9
%
Fiscal 2019
19.8
%
9.8
%
6.6
%
12.6
%
Adjusted operating margin (non-GAAP)
Fiscal 2020
23.0
%
12.4
%
8.6
%
15.8
%
Fiscal 2019
22.1
%
12.8
%
9.9
%
15.4
%
Leadership Brand Net Sales
Revenue (2)
(Unaudited)
(in thousands)
Three Months Ended August
31,
Six Months Ended August
31,
2019
2018
2019
2018
Leadership Brand sales revenue, net
$
331,183
$
319,045
$
632,742
$
599,804
All other sales revenue, net
82,812
74,503
157,588
148,423
Total sales revenue, net
$
413,995
$
393,548
$
790,330
$
748,227
SELECTED OTHER DATA
Reconciliation of Non-GAAP
Financial Measures – GAAP Operating Income
to Adjusted Operating Income
(non-GAAP) (1)
(Unaudited)
(in thousands)
Three Months Ended August 31,
2019
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
35,698
21.3
%
$
12,408
7.8
%
$
6,414
7.3
%
$
54,520
13.2
%
Restructuring charges
2
—
—
—
428
0.5
%
430
0.1
%
Subtotal
35,700
21.3
%
12,408
7.8
%
6,842
7.8
%
54,950
13.3
%
Amortization of intangible assets
179
0.1
%
2,798
1.8
%
1,486
1.7
%
4,463
1.1
%
Non-cash share-based compensation
1,769
1.1
%
2,519
1.6
%
2,093
2.4
%
6,381
1.5
%
Adjusted operating income (non-GAAP)
$
37,648
22.4
%
$
17,725
11.2
%
$
10,421
11.9
%
$
65,794
15.9
%
Three Months Ended August 31,
2018
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
28,329
20.6
%
$
13,631
7.8
%
$
8,700
10.8
%
$
50,660
12.9
%
Restructuring charges
—
—
%
—
—
%
859
1.1
%
859
0.2
%
Subtotal
28,329
20.6
%
13,631
7.8
%
9,559
11.9
%
51,519
13.1
%
Amortization of intangible assets
511
0.4
%
2,704
1.5
%
186
0.2
%
3,401
0.9
%
Non-cash share-based compensation
1,994
1.5
%
2,156
1.2
%
539
0.7
%
4,689
1.2
%
Adjusted operating income (non-GAAP)
$
30,834
22.4
%
$
18,491
10.5
%
$
10,284
12.8
%
$
59,609
15.1
%
Six Months Ended August 31,
2019
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
66,898
21.4
%
$
27,464
8.8
%
$
7,365
4.5
%
$
101,727
12.9
%
Restructuring charges
90
—
%
—
—
%
959
0.6
%
1,049
0.1
%
Subtotal
66,988
21.4
%
27,464
8.8
%
8,324
5.1
%
102,776
13.0
%
Amortization of intangible assets
697
0.2
%
5,596
1.8
%
2,046
1.2
%
8,339
1.1
%
Non-cash share-based compensation
4,343
1.4
%
5,893
1.9
%
3,749
2.3
%
13,985
1.8
%
Adjusted operating income (non-GAAP)
$
72,028
23.0
%
$
38,953
12.4
%
$
14,119
8.6
%
$
125,100
15.8
%
Six Months Ended August 31,
2018
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
50,512
19.8
%
$
33,288
9.8
%
$
10,187
6.6
%
$
93,987
12.6
%
Restructuring charges
760
0.3
%
358
0.1
%
1,466
1.0
%
2,584
0.3
%
Subtotal
51,272
20.1
%
33,646
9.9
%
11,653
7.6
%
96,571
12.9
%
Amortization of intangible assets
985
0.4
%
5,408
1.6
%
1,129
0.7
%
7,522
1.0
%
Non-cash share-based compensation
3,980
1.6
%
4,482
1.3
%
2,551
1.7
%
11,013
1.5
%
Adjusted operating income (non-GAAP)
$
56,237
22.1
%
$
43,536
12.8
%
$
15,333
9.9
%
$
115,106
15.4
%
SELECTED OTHER DATA
Reconciliation of Non-GAAP
Financial Measures - EBITDA
(Earnings Before Interest,
Taxes, Depreciation and Amortization) and Adjusted EBITDA by
Segment (1)
(Unaudited)
(in thousands)
Three Months Ended August 31,
2019
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
35,698
$
12,408
$
6,414
$
54,520
Depreciation and amortization, excluding
amortized interest
1,416
4,269
2,664
8,349
Nonoperating income, net
—
—
89
89
EBITDA (non-GAAP)
37,114
16,677
9,167
62,958
Add: Restructuring charges
2
—
428
430
Non-cash share-based compensation
1,769
2,519
2,093
6,381
Adjusted EBITDA (non-GAAP)
$
38,885
$
19,196
$
11,688
$
69,769
Three Months Ended August 31,
2018
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
28,329
$
13,631
$
8,700
$
50,660
Depreciation and amortization, excluding
amortized interest
1,522
4,229
1,562
7,313
Nonoperating income, net
—
—
85
85
EBITDA (non-GAAP)
29,851
17,860
10,347
58,058
Add: Restructuring charges
—
—
859
859
Non-cash share-based compensation
1,994
2,156
539
4,689
Adjusted EBITDA (non-GAAP)
$
31,845
$
20,016
$
11,745
$
63,606
Six Months Ended August 31,
2019
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
66,898
$
27,464
$
7,365
$
101,727
Depreciation and amortization, excluding
amortized interest
3,029
8,582
4,505
16,116
Nonoperating income, net
—
—
221
221
EBITDA (non-GAAP)
69,927
36,046
12,091
118,064
Add: Restructuring charges
90
—
959
1,049
Non-cash share-based compensation
4,343
5,893
3,749
13,985
Adjusted EBITDA (non-GAAP)
$
74,360
$
41,939
$
16,799
$
133,098
Six Months Ended August 31,
2018
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
50,512
$
33,288
$
10,187
$
93,987
Depreciation and amortization, excluding
amortized interest
3,006
8,377
3,912
15,295
Nonoperating income, net
—
—
160
160
EBITDA (non-GAAP)
53,518
41,665
14,259
109,442
Add: Restructuring charges
760
358
1,466
2,584
Non-cash share-based compensation
3,980
4,482
2,551
11,013
Adjusted EBITDA (non-GAAP)
$
58,258
$
46,505
$
18,276
$
123,039
Reconciliation of GAAP Income
and Diluted Earnings Per Share (“EPS”) from Continuing
Operations to Adjusted Income
and Adjusted Diluted EPS from Continuing Operations (non- GAAP) (1)
(Unaudited)
(dollars in thousands, except
per share data)
Three Months Ended August 31,
2019
Income from Continuing
Operations
Diluted EPS from Continuing
Operations
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
51,393
$
5,298
$
46,095
$
2.04
$
0.21
$
1.83
Restructuring charges
430
66
364
0.02
—
0.01
Subtotal
51,823
5,364
46,459
2.05
0.21
1.84
Amortization of intangible assets
4,463
248
4,215
0.18
0.01
0.17
Non-cash share-based compensation
6,381
515
5,866
0.25
0.02
0.23
Adjusted (non-GAAP)
$
62,667
$
6,127
$
56,540
$
2.48
$
0.24
$
2.24
Weighted average shares of common stock
used in computing diluted EPS
25,245
Three Months Ended August 31,
2018
Income from Continuing
Operations
Diluted EPS from Continuing
Operations
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
47,990
$
3,973
$
44,017
$
1.81
$
0.15
$
1.66
Restructuring charges
859
41
818
0.03
—
0.03
Subtotal
48,849
4,014
44,835
1.84
0.15
1.69
Amortization of intangible assets
3,402
56
3,346
0.13
—
0.13
Non-cash share-based compensation
4,689
337
4,352
0.18
0.01
0.16
Adjusted (non-GAAP)
$
56,940
$
4,407
$
52,533
$
2.14
$
0.17
$
1.98
Weighted average shares of common stock
used in computing diluted EPS
26,557
Six Months Ended August 31,
2019
Income from Continuing
Operations
Diluted EPS from Continuing
Operations
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
95,424
$
8,635
$
86,789
$
3.78
$
0.34
$
3.44
Restructuring charges
1,049
68
981
0.04
—
0.04
Subtotal
96,473
8,703
87,770
3.82
0.34
3.48
Amortization of intangible assets
8,339
369
7,970
0.33
0.01
0.32
Non-cash share-based compensation
13,985
1,091
12,894
0.55
0.04
0.51
Adjusted (non-GAAP)
$
118,797
$
10,163
$
108,634
$
4.71
$
0.40
$
4.30
Weighted average shares of common stock
used in computing diluted EPS
25,245
Six Months Ended August 31,
2018
Income from Continuing
Operations
Diluted EPS from Continuing
Operations
Before Tax
Tax
Net of Tax
Before Tax
Tax
Net of Tax
As reported (GAAP)
$
88,705
$
6,515
$
82,190
$
3.33
$
0.24
$
3.09
Restructuring charges
2,584
183
2,401
0.10
0.01
0.09
Subtotal
91,289
6,698
84,591
3.43
0.25
3.18
Amortization of intangible assets
7,522
190
7,332
0.28
0.01
0.28
Non-cash share-based compensation
11,013
606
10,407
0.41
0.02
0.39
Adjusted (non-GAAP)
$
109,824
$
7,494
$
102,330
$
4.13
$
0.28
$
3.85
Weighted average shares of common stock
used in computing diluted EPS
26,612
Selected Consolidated Balance
Sheet, Cash Flow and Liquidity Information (5)
(Unaudited)
(in thousands)
August 31,
2019
2018
Balance Sheet:
Cash and cash equivalents
$
17,031
$
19,915
Receivables, net
310,377
313,615
Inventory, net
370,915
284,828
Total assets, current
711,371
636,367
Total assets
1,775,953
1,694,588
Total liabilities, current
317,857
298,007
Total long-term liabilities
370,721
320,841
Total debt
301,193
301,076
Consolidated stockholders' equity
1,087,375
1,075,740
Liquidity:
Working capital
$
393,514
$
338,360
Six Months Ended August
31,
2019
2018
Cash Flow from continuing operations:
Depreciation and amortization
$
16,116
$
15,295
Net cash provided by operating
activities
38,211
37,311
Capital and intangible asset
expenditures
8,861
13,061
Net debt proceeds (repayments)
(20,100
)
10,700
Payments for repurchases of common
stock
9,131
42,240
Fiscal 2020 Updated Outlook
for Net Sales Revenue
(Unaudited)
(in thousands)
Fiscal 2019
Updated Outlook for Fiscal
2020
Net sales revenue
$
1,564,151
$
1,610,000
—
$
1,640,000
2.9
%
—
4.8
%
Reconciliation of Fiscal 2020
Updated Outlook for GAAP Diluted Earnings Per Share
(“EPS”) from Continuing
Operations to Adjusted Diluted EPS from Continuing
Operations
(non-GAAP) (1)
(Unaudited)
Six Months Ended August 31,
2019
Outlook for the Balance of the
Fiscal Year (Six Months)
Updated Outlook Fiscal
2020
Diluted EPS from continuing operations, as
reported (GAAP)
$
3.44
$
3.40
—
$
3.60
$
6.84
—
$
7.04
Restructuring charges, net of tax
0.04
0.01
—
0.02
0.05
—
0.06
Subtotal
3.48
3.41
—
3.62
6.89
—
7.10
Amortization of intangible assets, net of
tax
0.32
0.36
—
0.38
0.68
—
0.70
Non-cash share-based compensation, net of
tax
0.51
0.43
—
0.45
0.94
—
0.96
Adjusted diluted EPS from continuing
operations (non-GAAP)
$
4.30
$
4.20
—
$
4.45
$
8.50
—
$
8.75
Updated Effective Tax Rate
(GAAP) and Adjusted Effective Tax Rate (Non-GAAP) (1)
(Unaudited)
Six Months Ended August 31,
2019
Outlook for the Balance of the
Fiscal Year (Six Months)
Updated Outlook Fiscal
2020
Effective tax rate, as reported (GAAP)
9.0
%
10.3
%
—
12.1
%
9.6
%
—
10.7
%
Restructuring charges
—
%
—
%
—
—
%
—
%
—
—
%
Subtotal
9.0
%
10.3
%
—
12.1
%
9.6
%
—
10.7
%
Amortization of intangible assets
(0.4
)%
(0.5
)%
—
(0.7
)%
(0.4
)%
—
(0.5
)%
Non-cash share based compensation
(0.1
)%
(0.2
)%
—
(0.3
)%
(0.2
)%
—
(0.2
)%
Adjusted effective tax rate
8.6
%
9.5
%
—
11.1
%
9.0
%
—
10.0
%
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
effective tax rate, 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 may be
considered non-GAAP financial information as contemplated by SEC
Regulation G, Rule 100. Accordingly, the Company is providing the
preceding tables that reconcile these measures to their
corresponding GAAP-based measures presented in the Company's
Condensed Consolidated 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 financial measures, in combination with the
Company’s financial results calculated in accordance with GAAP,
provide investors with additional perspective regarding the impact
of certain charges on applicable income, margin and earnings per
share measures. The Company also believes that these non-GAAP
measures facilitate a more direct comparison of the Company’s
performance with its competitors. The Company further believes that
including the excluded charges would not accurately reflect the
underlying performance of the Company’s continuing operations for
the period in which the charges are incurred, even though such
charges may be incurred and reflected in the Company’s GAAP
financial results in the near future. Additionally, the non-GAAP
measures are used by management for measuring and evaluating the
Company’s performance. The material limitation associated with the
use of the non-GAAP 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)
Leadership Brand net sales consists of revenue from the OXO,
Honeywell, Braun, PUR, Hydro Flask, Vicks and Hot Tools brands.
(3)
Amortization of intangible assets.
(4)
Non-cash share-based compensation.
(5)
Amounts presented are from continuing operations with the
exception of stockholders’ equity, which is presented on a
consolidated basis and includes discontinued operations.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191008005254/en/
Investors: Helen of Troy Limited Anne Rakunas, Director,
External Communications (915) 225-4841
ICR, Inc. Allison Malkin, Partner (203) 682-8200
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