Consolidated Net Sales Growth of 10.1%; Core
Business Net Sales Growth of 10.7% GAAP Diluted Earnings Per
Share ("EPS") from Continuing Operations of $2.71 Adjusted
Diluted EPS from Continuing Operations of $3.12; Growth of
30.0% Raises Fiscal 2020 GAAP Diluted EPS from Continuing
Operations Outlook to $7.29 - $7.45 Raises Fiscal 2020
Adjusted Diluted EPS from Continuing Operations Outlook to $8.90 -
$9.10 Raises Fiscal 2020 Consolidated Net Sales Growth
Outlook to 5.5% - 7.1%
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 November 30, 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 – Third Quarter of
Fiscal 2020
- Consolidated net sales revenue increase of 10.1%, including:
- An increase in Leadership Brand net sales of 10.6%
- An increase in online channel net sales of approximately
30%
- Core business growth of 10.7%
- GAAP operating income of $79.3 million, or 16.7% of net sales,
compared to GAAP operating income of $61.3 million, or 14.2% of net
sales, for the same period last year
- Non-GAAP adjusted operating income increase of 27.8% to $90.3
million, or 19.0% of net sales, compared to $70.6 million, or 16.4%
of net sales, for the same period last year
- GAAP diluted EPS from continuing operations of $2.71, compared
to GAAP diluted EPS of $2.06 for the same period last year
- Non-GAAP adjusted diluted EPS from continuing operations
increase of 30.0% to $3.12, compared to $2.40 for the same period
last year
Julien R. Mininberg, Chief Executive Officer, stated: “We are
very pleased to report another strong quarter. Our Phase II
Transformation initiatives continue to produce results, with
consolidated core business sales growth of 10.7%, increased
adjusted operating margin in all three of our business segments,
and adjusted diluted EPS growth of 30%. Our Leadership Brands sales
grew 10.6%, online sales grew approximately 30%, and we continue to
invest in our brands and across our global shared services. The
Housewares segment again led our sales growth with healthy
consumption ahead of our expectations, from both OXO and Hydro
Flask. Beauty segment sales also grew ahead of our expectations,
driven by continued strong performance in appliances. Core business
sales in our Health & Home segment declined slightly in the
quarter, as international sales growth and new product
introductions were more than offset by net retail distribution
changes and the unfavorable comparative impact of more wildfire
activity in the same period last year. I am also pleased to be
raising our sales and adjusted EPS outlook for this fiscal year.
Our revised sales outlook projects a third consecutive year of
organic sales growth above 5.0%. Our increased EPS outlook reflects
higher margin expectations for this fiscal year, and significant
incremental investments in our Leadership Brands and key Phase II
initiatives in the fourth quarter of fiscal 2020 that are expected
to drive short and mid-term growth.”
Mr. Mininberg continued: “Subsequent to the end of the third
quarter we also advanced another key part of our transformation
strategy, which would add an eighth Leadership Brand to our
portfolio. As announced on December 19, 2019, we entered into a
definitive agreement to acquire Drybar Products LLC, which we
expect to add meaningful accretion to key financial measures, add
critical mass to our flywheel, and expand our Beauty division into
the growing prestige hair care products segment. We are excited
about the prospects for adding value to this already outstanding
brand.”
Three Months Ended November
30,
(in thousands)
Housewares
Health & Home
Beauty
Total
Fiscal 2019 sales revenue, net
$
142,937
$
187,863
$
100,281
$
431,081
Core business growth (decline)
40,768
(996
)
6,232
46,004
Impact of foreign currency
(494
)
(1,057
)
(797
)
(2,348
)
Change in sales revenue, net
40,274
(2,053
)
5,435
43,656
Fiscal 2020 sales revenue, net
$
183,211
$
185,810
$
105,716
$
474,737
Total net sales revenue growth
(decline)
28.2
%
(1.1
)%
5.4
%
10.1
%
Core business growth (decline)
28.5
%
(0.5
)%
6.2
%
10.7
%
Impact of foreign currency
(0.3
)%
(0.6
)%
(0.8
)%
(0.5
)%
Operating margin (GAAP)
Fiscal 2020
23.1
%
13.1
%
11.9
%
16.7
%
Fiscal 2019
20.9
%
10.2
%
12.2
%
14.2
%
Adjusted operating margin (non-GAAP)
Fiscal 2020
24.3
%
15.5
%
16.0
%
19.0
%
Fiscal 2019
22.8
%
13.0
%
13.5
%
16.4
%
Consolidated Operating Results - Third
Quarter Fiscal 2020 Compared to Third Quarter Fiscal
2019
- Consolidated net sales revenue increased 10.1% to $474.7
million compared to $431.1 million, driven by a core business
increase of $46.0 million, or 10.7%, primarily reflecting growth in
consolidated online sales, an increase in brick and mortar sales in
the Housewares segment, higher international sales, and an increase
in sales in the appliance category in the Beauty segment. These
factors were partially offset by a slight core business decline in
the Health & Home segment, the unfavorable impact from foreign
currency fluctuations of approximately $2.3 million, or 0.5%, and a
decline in the personal care category within the Beauty
segment.
- Consolidated gross profit margin increased 2.0 percentage
points to 44.2%, compared to 42.2%. The increase is primarily due
to a higher mix of Housewares sales at a higher overall gross
profit margin and a favorable product and channel mix within the
Housewares segment. These factors were partially offset by a lower
mix of personal care sales in the Beauty segment.
- Consolidated SG&A as a percentage of sales decreased by 0.5
percentage points to 27.5% of net sales compared to 28.0%. The
decrease is primarily due to lower advertising expense, 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 of foreign currency exchange and forward
contract settlements. These factors were partially offset by higher
annual incentive compensation expense, acquisition-related
expenses, higher amortization expense, and higher freight and
distribution expense.
- Consolidated operating income was $79.3 million, or 16.7% of
net sales, compared to $61.3 million, or 14.2% of net sales. The
increase in consolidated operating margin primarily reflects a
higher mix of Housewares sales at a higher overall operating
margin, a favorable product and channel mix within the Housewares
segment, lower advertising expense, 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, acquisition-related expenses, higher
amortization expense, and higher freight and distribution
expense.
- The effective tax rate was 10.3%, compared to 6.9%. 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 $68.7 million, or $2.71
per diluted share on 25.4 million weighted average shares
outstanding, compared to $54.3 million, or $2.06 per diluted share
on 26.4 million weighted average diluted shares outstanding.
- There was no income or loss from discontinued operations,
compared to a loss of $4.9 million, or $0.18 per diluted
share.
- Adjusted EBITDA increased 26.6% to $94.4 million compared to
$74.5 million.
On an adjusted basis for the third quarters of fiscal 2020 and
2019, excluding acquisition-related expenses, restructuring
charges, non‐cash share-based compensation, and non-cash
amortization of intangible assets, as applicable:
- Adjusted operating income increased $19.7 million, or 27.8%, to
$90.3 million, or 19.0% of net sales, compared to $70.6 million, or
16.4% of net sales. The 2.6 percentage point increase in adjusted
operating margin primarily reflects a higher mix of Housewares
sales at a better overall operating margin, a favorable product and
channel mix within the Housewares segment, lower advertising
expense, 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 and higher freight
and distribution expense.
- Adjusted income from continuing operations increased $15.9
million, or 25.2%, to $79.1 million, or $3.12 per diluted share,
compared to $63.2 million, or $2.40 per diluted share. The 30.0%
increase in adjusted diluted EPS from continuing operations was
primarily due to higher operating income in the Housewares segment,
lower advertising expense and the impact of lower weighted average
diluted shares outstanding compared to the same period last year.
This was partially offset by higher income tax expense.
Segment Operating Results - Third
Quarter Fiscal 2020 Compared to Third Quarter Fiscal
2019
Housewares net sales increased by 28.2%, or $40.3 million,
primarily due to point of sale growth with existing domestic brick
and mortar customers, an increase in online sales, an increase in
international sales, higher club sales and new product
introductions. The segment was unfavorably impacted by net foreign
currency fluctuations of $0.5 million or 0.3%. Operating income
increased 41.7% to $42.3 million, or 23.1% of segment net sales,
compared to $29.8 million, or 20.9% of segment net sales, in the
same period last year. The 2.2 percentage point increase was
primarily due to the margin impact of a more favorable product and
channel mix, lower advertising expense and the impact that higher
sales had on operating leverage. These factors were partially
offset by higher freight and distribution expense to support
increased retail customer shipments and strong direct-to-consumer
demand. Adjusted operating income increased 36.8% to $44.6 million,
or 24.3% of segment net sales compared to $32.6 million, or 22.8%
of segment net sales, in the same period last year.
Health & Home net sales decreased 1.1% or $2.1 million,
primarily driven by a core business decline of $1.0 million, or
0.5% due to lower domestic sales driven by the unfavorable
comparative impact from more wildfire activity in the same period
last year, and net distribution changes year-over-year. These
factors were partially offset by revenue from new product
introductions and growth in international sales. The segment was
unfavorably impacted by net foreign currency fluctuations of
approximately $1.1 million, or 0.6%. Operating income increased
26.9% to $24.4 million, or 13.1% of segment net sales, compared
$19.2 million, or 10.2% of segment net sales, in the same period
last year. The 2.9 percentage point increase was primarily due to
lower advertising expense and the margin impact of a more favorable
product mix. These factors were offset by unfavorable operating
leverage from the decline in sales. Adjusted operating income
increased 17.7% to $28.8 million, or 15.5% of segment net sales,
compared to $24.5 million, or 13.0% of segment net sales, in the
same period last year.
Beauty net sales increased 5.4%, or $5.4 million, primarily due
to increased 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
decline in the personal care category and the unfavorable impact of
net foreign currency fluctuations of approximately $0.8 million, or
0.8%. Operating income increased 3.1% to $12.6 million, or 11.9% of
segment net sales, compared to $12.2 million, or 12.2% of segment
net sales, in the same period last year. The operating margin
decrease is primarily due to higher annual incentive compensation
expense, acquisition-related expenses, higher amortization expense,
and the margin impact of a less favorable product and channel mix.
These factors were partially offset by lower advertising expense.
Adjusted operating income increased 24.7% to $16.9 million, or
16.0% of segment net sales, compared to $13.6 million, or 13.5% of
segment net sales, in the same period last year.
Balance Sheet and Cash Flow Highlights
- Third Quarter Fiscal 2020 Compared to Third Quarter Fiscal
2019
- Cash and cash equivalents totaled $19.6 million, compared to
$19.1 million.
- Total short- and long-term debt was $244.2 million, compared to
$339.7 million, a net decrease of $95.5 million.
- Accounts receivable turnover was 68.9 days, compared to 69.4
days.
- Inventory was $333.7 million, compared to $300.6 million.
Trailing twelve-month inventory turnover was 2.9 times compared to
3.4 times.
- Net cash provided by operating activities from continuing
operations for the first nine months of the fiscal year was $101.4
million, compared to $109.5 million.
Subsequent Event
On December 19, 2019, the Company entered into a definitive
agreement to acquire Drybar Products LLC, which includes the Drybar
trademark and other intellectual property assets associated with
Drybar’s products, as well as certain related production assets and
working capital. As part of the transaction, Helen of Troy will
grant a worldwide license to Drybar Holdings LLC, the owner and
long-time operator of Drybar blowout salons, to use the Drybar
trademark in their continued operation of Drybar salons. The salons
will exclusively use, promote, and sell Helen of Troy’s Drybar
products globally. The total purchase consideration is $255.0
million in cash, subject to certain customary closing adjustments.
The Company expects to finance the acquisition with cash on hand
and borrowings from its existing revolving credit facility. The
acquisition is expected to close by January 31, 2020, subject to
customary closing conditions, including regulatory approvals.
Updated Fiscal 2020 Annual
Outlook
For fiscal 2020, the Company has updated its outlook based on
the Company's year-to-date performance and now expects consolidated
net sales revenue to be in the range of $1.650 to $1.675 billion,
which implies consolidated sales growth of 5.5% to 7.1% compared to
the prior expectation of 2.9% to 4.8%. The outlook does not include
any results related to Drybar Products LLC, as the exact timing of
closing is not known and there are conditions to closing that must
be met, including regulatory approvals. By segment, the outlook
reflects:
- Housewares net sales growth of 19% to 21%, compared to the
prior expectation of 13% to 15%;
- Health & Home net sales decline of 2% to 4%, compared to
the prior expectation of a decline in the low single digits;
and
- Beauty net sales growth of 3% to 5%, compared to the prior
expectation of growth in the low-single digits.
The Company now expects consolidated GAAP diluted EPS from
continuing operations of $7.29 to $7.45, and non-GAAP adjusted
diluted EPS from continuing operations in the range of $8.90 to
$9.10, which excludes any asset impairment charges,
acquisition-related expenses, restructuring charges, share-based
compensation expense and intangible asset amortization expense.
The Company’s net sales and EPS outlook continues to assume 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 December 2019 foreign currency exchange rates will
remain constant for the remainder of the fiscal year. The Company
continues to expect 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 year to date, partially
offset by an expected increase in growth investments, higher
expected incentive compensation expense, and higher expected
freight and distribution costs. These costs support strong demand
in the Company's Housewares and Beauty segments, 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 9.7% to 9.9%, and an adjusted effective tax rate range of 9.1%
to 9.2% 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
decreases, 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 4:45 p.m.
Eastern Time today, Wednesday, January 8, 2020. 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 7:45 p.m. Eastern Time on January 8, 2020 until 11:59
p.m. Eastern Time on January 15, 2020 and can be accessed by
dialing (844) 512-2921 and entering replay pin number 13697370. 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 from continuing operations, adjusted diluted earnings per
share from continuing operations, 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. For additional information see Note 1 to the accompanying
tables to this Press Release.
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,
pending 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 November
30,
2019
2018
Sales revenue, net
$
474,737
100.0
%
$
431,081
100.0
%
Cost of goods sold
264,764
55.8
%
249,236
57.8
%
Gross profit
209,973
44.2
%
181,845
42.2
%
Selling, general and administrative
expense ("SG&A")
130,692
27.5
%
120,524
28.0
%
Restructuring charges
12
—
%
25
—
%
Operating income
79,269
16.7
%
61,296
14.2
%
Non-operating income, net
92
—
%
15
—
%
Interest expense
(2,767
)
(0.6
)%
(2,971
)
(0.7
)%
Income before income tax
76,594
16.1
%
58,340
13.5
%
Income tax expense
7,895
1.7
%
4,020
0.9
%
Income from continuing operations
68,699
14.5
%
54,320
12.6
%
Loss from discontinued operations, net of
tax
—
—
%
(4,850
)
(1.1
)%
Net income
$
68,699
14.5
%
$
49,470
11.5
%
Earnings (loss) per share - diluted:
Continuing operations
$
2.71
$
2.06
Discontinued operations
—
(0.18
)
Total earnings per share - diluted
$
2.71
$
1.88
Weighted average shares of common stock
used in computing diluted earnings per share
25,396
26,366
Nine Months Ended November
30,
2019
2018
Sales revenue, net
$
1,265,067
100.0
%
$
1,179,308
100.0
%
Cost of goods sold
723,216
57.2
%
695,732
59.0
%
Gross profit
541,851
42.8
%
483,576
41.0
%
SG&A
359,794
28.4
%
325,684
27.6
%
Restructuring charges
1,061
0.1
%
2,609
0.2
%
Operating income
180,996
14.3
%
155,283
13.2
%
Non-operating income, net
313
—
%
175
—
%
Interest expense
(9,291
)
(0.7
)%
(8,413
)
(0.7
)%
Income before income tax
172,018
13.6
%
147,045
12.5
%
Income tax expense
16,530
1.3
%
10,535
0.9
%
Income from continuing
operations
155,488
12.3
%
136,510
11.6
%
Loss from discontinued
operations, net of tax
—
—
%
(5,231
)
(0.4
)%
Net income
$
155,488
12.3
%
$
131,279
11.1
%
Earnings (loss) per share -
diluted:
Continuing operations
$
6.15
$
5.15
Discontinued operations
—
(0.20
)
Total earnings per share -
diluted
$
6.15
$
4.95
Weighted average shares of common
stock used in computing diluted earnings per share
25,295
26,520
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 November
30, 2019
As Reported
(GAAP)
Adjustments
Adjusted
(Non-GAAP)
Sales revenue, net
$
474,737
100.0
%
$
—
$
474,737
100.0
%
Cost of goods sold
264,764
55.8
%
—
264,764
55.8
%
Gross profit
209,973
44.2
%
—
209,973
44.2
%
SG&A
130,692
27.5
%
(4,790
)
(3)
119,669
25.2
%
(4,758
)
(4)
(1,475
)
(5)
Restructuring charges
12
—
%
(12
)
—
—
%
Operating income
79,269
16.7
%
11,035
90,304
19.0
%
Non-operating income, net
92
—
%
—
92
—
%
Interest expense
(2,767
)
(0.6
)%
—
(2,767
)
(0.6
)%
Income before income tax
76,594
16.1
%
11,035
87,629
18.5
%
Income tax expense
7,895
1.7
%
617
8,512
1.8
%
Income from continuing operations
68,699
14.5
%
10,418
79,117
16.7
%
Diluted EPS from continuing operations
$
2.71
$
0.41
$
3.12
Weighted average shares of common stock
used in computing diluted EPS
25,396
25,396
Three Months Ended November
30, 2018
As Reported
(GAAP)
Adjustments
Adjusted
(Non-GAAP)
Sales revenue, net
$
431,081
100.0
%
$
—
$
431,081
100.0
%
Cost of goods sold
249,236
57.8
%
—
249,236
57.8
%
Gross profit
181,845
42.2
%
—
181,845
42.2
%
SG&A
120,524
28.0
%
(3,300
)
(3)
111,208
25.8
%
(6,016
)
(4)
Restructuring charges
25
—
%
(25
)
—
—
%
Operating income
61,296
14.2
%
9,341
70,637
16.4
%
Non-operating income, net
15
—
%
—
15
—
%
Interest expense
(2,971
)
(0.7
)%
—
(2,971
)
(0.7
)%
Income before income tax
58,340
13.5
%
9,341
67,681
15.7
%
Income tax expense
4,020
0.9
%
463
4,483
1.0
%
Income from continuing operations
54,320
12.6
%
8,878
63,198
14.7
%
Diluted EPS from continuing operations
$
2.06
$
0.34
$
2.40
Weighted average shares of common stock
used in computing diluted EPS
26,366
26,366
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)
Nine Months Ended November 30,
2019
As Reported
(GAAP)
Adjustments
Adjusted
(Non-GAAP)
Sales revenue, net
$
1,265,067
100.0
%
$
—
$
1,265,067
100.0
%
Cost of goods sold
723,216
57.2
%
—
723,216
57.2
%
Gross profit
541,851
42.8
%
—
541,851
42.8
%
SG&A
359,794
28.4
%
(13,129
)
(3)
326,447
25.8
%
(18,743
)
(4)
(1,475
)
(5)
Restructuring charges
1,061
0.1
%
(1,061
)
—
—
%
Operating income
180,996
14.3
%
34,408
215,404
17.0
%
Non-operating income, net
313
—
%
—
313
—
%
Interest expense
(9,291
)
(0.7
)%
—
(9,291
)
(0.7
)%
Income before income tax
172,018
13.6
%
34,408
206,426
16.3
%
Income tax expense
16,530
1.3
%
2,145
18,675
1.5
%
Income from continuing
operations
155,488
12.3
%
32,263
187,751
14.8
%
Diluted EPS from continuing
operations
$
6.15
$
1.28
$
7.42
Weighted average shares of common
stock used in computing diluted EPS
25,295
25,295
Nine Months Ended November 30,
2018
As Reported
(GAAP)
Adjustments
Adjusted
(Non-GAAP)
Sales revenue, net
$
1,179,308
100.0
%
$
—
$
1,179,308
100.0
%
Cost of goods sold
695,732
59.0
%
—
695,732
59.0
%
Gross profit
483,576
41.0
%
—
483,576
41.0
%
SG&A
325,684
27.6
%
(10,822
)
(3)
297,833
25.3
%
(17,029
)
(4)
Restructuring charges
2,609
0.2
%
(2,609
)
—
—
%
Operating income
155,283
13.2
%
30,460
185,743
15.8
%
Non-operating income, net
175
—
%
—
175
—
%
Interest expense
(8,413
)
(0.7
)%
—
(8,413
)
(0.7
)%
Income before income tax
147,045
12.5
%
30,460
177,505
15.1
%
Income tax expense
10,535
0.9
%
1,442
11,977
1.0
%
Income from continuing
operations
136,510
11.6
%
29,018
165,528
14.0
%
Diluted EPS from continuing
operations
$
5.15
$
1.09
$
6.24
Weighted average shares of common
stock used in computing diluted EPS
26,520
26,520
Consolidated and Segment Net
Sales, Operating Margin and Adjusted Operating Margin (non-GAAP)
(1)
(Unaudited)
(in thousands)
Three Months Ended November
30,
Housewares
Health & Home
Beauty
Total
Fiscal 2019 sales revenue, net
$
142,937
$
187,863
$
100,281
$
431,081
Core business growth (decline)
40,768
(996
)
6,232
46,004
Impact of foreign currency
(494
)
(1,057
)
(797
)
(2,348
)
Change in sales revenue, net
40,274
(2,053
)
5,435
43,656
Fiscal 2020 sales revenue, net
$
183,211
$
185,810
$
105,716
$
474,737
Total net sales revenue growth
(decline)
28.2
%
(1.1
)%
5.4
%
10.1
%
Core business growth (decline)
28.5
%
(0.5
)%
6.2
%
10.7
%
Impact of foreign currency
(0.3
)%
(0.6
)%
(0.8
)%
(0.5
)%
Operating margin (GAAP)
Fiscal 2020
23.1
%
13.1
%
11.9
%
16.7
%
Fiscal 2019
20.9
%
10.2
%
12.2
%
14.2
%
Adjusted operating margin (non-GAAP)
Fiscal 2020
24.3
%
15.5
%
16.0
%
19.0
%
Fiscal 2019
22.8
%
13.0
%
13.5
%
16.4
%
Nine Months Ended November
30,
Housewares
Health & Home
Beauty
Total
Fiscal 2019 sales revenue,
net
$
397,738
$
527,077
$
254,493
$
1,179,308
Core business growth
(decline)
99,535
(23,532
)
16,566
92,569
Impact of foreign currency
(1,256
)
(4,002
)
(1,552
)
(6,810
)
Change in sales revenue, net
98,279
(27,534
)
15,014
85,759
Fiscal 2020 sales revenue,
net
$
496,017
$
499,543
$
269,507
$
1,265,067
Total net sales revenue growth
(decline)
24.7
%
(5.2
)%
5.9
%
7.3
%
Core business growth
(decline)
25.0
%
(4.5
)%
6.5
%
7.8
%
Impact of foreign currency
(0.3
)%
(0.8
)%
(0.6
)%
(0.6
)%
Operating margin (GAAP)
Fiscal 2020
22.0
%
10.4
%
7.4
%
14.3
%
Fiscal 2019
20.2
%
10.0
%
8.8
%
13.2
%
Adjusted operating margin
(non-GAAP)
Fiscal 2020
23.5
%
13.6
%
11.5
%
17.0
%
Fiscal 2019
22.3
%
12.9
%
11.4
%
15.8
%
Leadership Brand Net Sales
Revenue (2)
(Unaudited)
(in thousands)
Three Months Ended November
30,
Nine Months Ended November
30,
2019
2018
2019
2018
Leadership Brand sales revenue, net
$
379,604
$
343,364
$
1,012,346
$
943,168
All other sales revenue, net
95,133
87,717
252,721
236,140
Total sales revenue, net
$
474,737
$
431,081
$
1,265,067
$
1,179,308
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 November
30, 2019
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
42,272
23.1
%
$
24,372
13.1
%
$
12,625
11.9
%
$
79,269
16.7
%
Acquisition-related expenses (5)
—
—
%
—
—
%
1,475
1.4
%
1,475
0.3
%
Restructuring charges
—
—
%
—
—
%
12
—
%
12
—
%
Subtotal
42,272
23.1
%
24,372
13.1
%
14,112
13.3
%
80,756
17.0
%
Amortization of intangible assets
815
0.4
%
2,492
1.3
%
1,483
1.4
%
4,790
1.0
%
Non-cash share-based compensation
1,510
0.8
%
1,946
1.0
%
1,302
1.2
%
4,758
1.0
%
Adjusted operating income (non-GAAP)
$
44,597
24.3
%
$
28,810
15.5
%
$
16,897
16.0
%
$
90,304
19.0
%
Three Months Ended November
30, 2018
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
29,839
20.9
%
$
19,213
10.2
%
$
12,244
12.2
%
$
61,296
14.2
%
Restructuring charges
(20
)
—
%
—
—
%
45
—
%
25
—
%
Subtotal
29,819
20.9
%
19,213
10.2
%
12,289
12.3
%
61,321
14.2
%
Amortization of intangible assets
489
0.3
%
2,721
1.4
%
90
0.1
%
3,300
0.8
%
Non-cash share-based compensation
2,293
1.6
%
2,548
1.4
%
1,175
1.2
%
6,016
1.4
%
Adjusted operating income (non-GAAP)
$
32,601
22.8
%
$
24,482
13.0
%
$
13,554
13.5
%
$
70,637
16.4
%
Nine Months Ended November 30,
2019
Housewares
Health & Home
Beauty
Total
Operating income, as reported
(GAAP)
$
109,170
22.0
%
$
51,836
10.4
%
$
19,990
7.4
%
$
180,996
14.3
%
Acquisition-related expenses
(5)
—
—
%
—
—
%
1,475
0.5
%
1,475
0.1
%
Restructuring charges
90
—
%
—
—
%
971
0.4
%
1,061
0.1
%
Subtotal
109,260
22.0
%
51,836
10.4
%
22,436
8.3
%
183,532
14.5
%
Amortization of intangible
assets
1,512
0.3
%
8,088
1.6
%
3,529
1.3
%
13,129
1.0
%
Non-cash share-based
compensation
5,853
1.2
%
7,839
1.6
%
5,051
1.9
%
18,743
1.5
%
Adjusted operating income
(non-GAAP)
$
116,625
23.5
%
$
67,763
13.6
%
$
31,016
11.5
%
$
215,404
17.0
%
Nine Months Ended November 30,
2018
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
80,351
20.2
%
$
52,501
10.0
%
$
22,431
8.8
%
$
155,283
13.2
%
Restructuring charges
740
0.2
%
358
0.1
%
1,511
0.6
%
2,609
0.2
%
Subtotal
81,091
20.4
%
52,859
10.0
%
23,942
9.4
%
157,892
13.4
%
Amortization of intangible assets
1,474
0.4
%
8,129
1.5
%
1,219
0.5
%
10,822
0.9
%
Non-cash share-based compensation
6,273
1.6
%
7,030
1.3
%
3,726
1.5
%
17,029
1.4
%
Adjusted operating income (non-GAAP)
$
88,838
22.3
%
$
68,018
12.9
%
$
28,887
11.4
%
$
185,743
15.8
%
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 November
30, 2019
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
42,272
$
24,372
$
12,625
$
79,269
Depreciation and amortization, excluding
amortized interest
2,263
3,740
2,757
8,760
Non-operating income, net
—
—
92
92
EBITDA (non-GAAP)
44,535
28,112
15,474
88,121
Add: Acquisition-related expenses (5)
—
—
1,475
1,475
Restructuring charges
—
—
12
12
Non-cash share-based compensation
1,510
1,946
1,302
4,758
Adjusted EBITDA (non-GAAP)
$
46,045
$
30,058
$
18,263
$
94,366
Three Months Ended November
30, 2018
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
29,839
$
19,213
$
12,244
$
61,296
Depreciation and amortization, excluding
amortized interest
1,408
4,326
1,461
7,195
Non-operating income, net
—
—
15
15
EBITDA (non-GAAP)
31,247
23,539
13,720
68,506
Add: Restructuring charges
(20
)
—
45
25
Non-cash share-based compensation
2,293
2,548
1,175
6,016
Adjusted EBITDA (non-GAAP)
$
33,520
$
26,087
$
14,940
$
74,547
Nine Months Ended November 30,
2019
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
109,170
$
51,836
$
19,990
$
180,996
Depreciation and amortization, excluding
amortized interest
5,292
12,322
7,262
24,876
Non-operating income, net
—
—
313
313
EBITDA (non-GAAP)
114,462
64,158
27,565
206,185
Add: Acquisition-related expenses (5)
—
—
1,475
1,475
Restructuring charges
90
—
971
1,061
Non-cash share-based compensation
5,853
7,839
5,051
18,743
Adjusted EBITDA (non-GAAP)
$
120,405
$
71,997
$
35,062
$
227,464
Nine Months Ended November 30,
2018
Housewares
Health & Home
Beauty
Total
Operating income, as reported (GAAP)
$
80,351
$
52,501
$
22,431
$
155,283
Depreciation and amortization, excluding
amortized interest
4,414
12,703
5,373
22,490
Non-operating income, net
—
—
175
175
EBITDA (non-GAAP)
84,765
65,204
27,979
177,948
Add: Restructuring charges
740
358
1,511
2,609
Non-cash share-based compensation
6,273
7,030
3,726
17,029
Adjusted EBITDA (non-GAAP)
$
91,778
$
72,592
$
33,216
$
197,586
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 November
30, 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)
$
76,594
$
7,895
$
68,699
$
3.02
$
0.31
$
2.71
Acquisition-related expenses (5)
1,475
22
1,453
0.06
—
0.06
Restructuring charges
12
—
12
—
—
—
Subtotal
78,081
7,917
70,164
3.07
0.31
2.76
Amortization of intangible assets
4,790
252
4,538
0.19
0.01
0.18
Non-cash share-based compensation
4,758
343
4,415
0.19
0.01
0.17
Adjusted (non-GAAP)
$
87,629
$
8,512
$
79,117
$
3.45
$
0.34
$
3.12
Weighted average shares of common stock
used in computing diluted EPS
25,396
Three Months Ended November
30, 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)
$
58,340
$
4,020
$
54,320
$
2.21
$
0.15
$
2.06
Restructuring charges
25
2
23
—
—
—
Subtotal
58,365
4,022
54,343
2.21
0.15
2.06
Amortization of intangible assets
3,300
46
3,254
0.13
—
0.12
Non-cash share-based compensation
6,016
415
5,601
0.23
0.02
0.21
Adjusted (non-GAAP)
$
67,681
$
4,483
$
63,198
$
2.57
$
0.17
$
2.40
Weighted average shares of common stock
used in computing diluted EPS
26,366
Nine Months Ended November 30,
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)
$
172,018
$
16,530
$
155,488
$
6.80
$
0.65
$
6.15
Acquisition-related expenses (5)
1,475
22
1,453
0.06
—
0.06
Restructuring charges
1,061
68
993
0.04
—
0.04
Subtotal
174,554
16,620
157,934
6.90
0.66
6.24
Amortization of intangible assets
13,129
621
12,508
0.52
0.02
0.49
Non-cash share-based compensation
18,743
1,434
17,309
0.74
0.06
0.68
Adjusted (non-GAAP)
$
206,426
$
18,675
$
187,751
$
8.16
$
0.74
$
7.42
Weighted average shares of common stock
used in computing diluted EPS
25,295
Nine Months Ended November 30,
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)
$
147,045
$
10,535
$
136,510
$
5.54
$
0.40
$
5.15
Restructuring charges
2,609
185
2,424
0.10
0.01
0.09
Subtotal
149,654
10,720
138,934
5.64
0.40
5.24
Amortization of intangible assets
10,822
236
10,586
0.41
0.01
0.40
Non-cash share-based compensation
17,029
1,021
16,008
0.64
0.04
0.60
Adjusted (non-GAAP)
$
177,505
$
11,977
$
165,528
$
6.69
$
0.45
$
6.24
Weighted average shares of common stock
used in computing diluted EPS
26,520
Selected Consolidated Balance
Sheet, Cash Flow and Liquidity Information (6)
(Unaudited)
(in thousands)
November 30,
2019
2018
Balance Sheet:
Cash and cash equivalents
$
19,637
$
19,136
Receivables, net
365,543
339,124
Inventory, net
333,656
300,648
Total assets, current
729,239
673,345
Total assets
1,791,089
1,725,369
Total liabilities, current
317,899
335,337
Total long-term liabilities
311,506
356,774
Total debt
244,247
339,730
Consolidated stockholders' equity
1,161,684
1,033,258
Liquidity:
Working capital
$
411,340
$
338,008
Nine Months Ended November
30,
2019
2018
Cash Flow from continuing operations:
Depreciation and amortization
$
24,876
$
22,490
Net cash provided by operating
activities
101,418
109,495
Capital and intangible asset
expenditures
13,247
22,166
Net debt proceeds (repayments)
(77,300
)
49,100
Payments for repurchases of common
stock
10,133
142,415
Fiscal 2020 Updated Outlook
for Net Sales Revenue
(Unaudited)
(in thousands)
Fiscal 2019
Updated Outlook for Fiscal
2020
Net sales revenue
$
1,564,151
$
1,650,000
—
$
1,675,000
5.5
%
—
7.1
%
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)
Nine Months Ended November 30,
2019
Outlook for the Balance of the
Fiscal Year (Three Months)
Updated Outlook Fiscal
2020
Diluted EPS from continuing operations, as
reported (GAAP)
$6.15
$
1.14
—
$
1.30
$
7.29
—
$
7.45
Acquisition-related expenses, net of tax
(5)
0.06
0.01
—
0.02
0.07
—
0.08
Restructuring charges, net of tax
0.04
—
—
0.01
0.04
—
0.05
Subtotal
6.24
1.15
—
1.33
7.39
—
7.57
Amortization of intangible assets, net of
tax
0.49
0.16
—
0.17
0.65
—
0.66
Non-cash share-based compensation, net of
tax
0.68
0.17
—
0.18
0.85
—
0.86
Adjusted diluted EPS from continuing
operations (non-GAAP)
$7.42
$
1.48
—
$
1.68
$
8.90
—
$
9.10
Updated Effective Tax Rate
(GAAP) and Adjusted Effective Tax Rate (Non-GAAP) (1)
(Unaudited)
Nine Months Ended November 30,
2019
Outlook for the Balance of the
Fiscal Year (Three Months)
Updated Outlook Fiscal
2020
Effective tax rate, as reported (GAAP)
9.6
%
10.0
%
—
11.0
%
9.7
%
—
9.9
%
Acquisition-related expenses (5)
(0.1
)%
(0.1
)%
—
(0.1
)%
(0.1
)%
—
(0.1
)%
Restructuring charges
—
%
—
%
—
—
%
—
%
—
—
%
Subtotal
9.5
%
9.9
%
—
10.9
%
9.6
%
—
9.8
%
Amortization of intangible assets
(0.3
)%
(0.6
)%
—
(0.7
)%
(0.4
)%
—
(0.4
)%
Non-cash share based compensation
(0.1
)%
(0.2
)%
—
(0.3
)%
(0.1
)%
—
(0.2
)%
Adjusted effective tax rate
9.1
%
9.1
%
—
9.9
%
9.1
%
—
9.2
%
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 from
continuing operations, adjusted diluted EPS from continuing
operations, 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)
Acquisition-related expenses
associated with the definitive agreement to acquire Drybar Products
LLC included in SG&A for the three and nine-month periods ended
November 30, 2019.
(6)
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/20200108005817/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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