● Consolidated Net Sales
Revenue Growth of 9.0%; Core Business Growth of 7.9%
● GAAP Diluted Earnings Per
Share (EPS) from Continuing Operations of $1.43
● Adjusted Diluted EPS from Continuing
Operations of $1.87
● Revises Fiscal 2019 GAAP Diluted
EPS from Continuing Operations Outlook to $6.27 to $6.42
● Revises Fiscal 2019 Adjusted
Diluted EPS from Continuing Operations Outlook to $7.45 to
$7.70
● Maintains Fiscal 2019
Consolidated Net Sales Outlook of $1.485 to $1.510 billion
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 May 31, 2018. Following the
divestiture of Healthy Directions on December 20, 2017, the Company
no longer consolidates the Nutritional Supplements segment’s
operating results. The former segment’s operating results are
included in the Company’s financial statements and classified as
discontinued operations for all periods presented.
Executive Summary – First Quarter of
Fiscal 2019
- Consolidated net sales revenue increase
of 9.0%, including:
- An increase in Leadership Brand net
sales of approximately 14.7%
- An increase in online channel net sales
of approximately 30.3%
- Core business growth of 7.9%
- GAAP operating income of $43.3 million,
or 12.2% of net sales, which includes $1.7 million in restructuring
charges, compared to $30.6 million, or 9.4% of net sales, which
included $4.0 million in pre-tax non-cash impairment charges, in
the same period last year
- Non-GAAP adjusted operating income
growth of 30.4% to $55.5 million, or 15.6% of net sales, compared
to $42.6 million, or 13.1% of net sales, in the same period last
year
- GAAP diluted EPS from continuing
operations of $1.43, which includes $0.06 per share of
restructuring charges, compared to GAAP diluted EPS from continuing
operations of $1.00 in the same period last year, which included
$0.13 per share of impairment charges
- Non-GAAP adjusted diluted EPS from
continuing operations growth of 32.6% to $1.87, compared to $1.41
in the same period last year
- Net cash provided by operating
activities declined $10.9 million primarily due to a $15 million
settlement payment made during the quarter
- Repurchased 407,025 shares of common
stock in the open market during the quarter for $37.1 million
Julien R. Mininberg, Chief Executive Officer, stated: “We
continue to see excellent momentum in the business, which led to a
strong performance and a great start to our new fiscal year. Our
strategic choices and ongoing productivity enhancements from the
transformation plan are generating healthy results, with
consolidated net sales increasing 9.0% and adjusted diluted EPS
from continuing operations growing 32.6%. Investing in our
Leadership Brands, our infrastructure and our people continues to
pay off. Our Leadership Brands grew 14.7% and our digital
initiatives contributed to online sales growth of 30% in the
quarter. We were particularly pleased to see healthy customer
replenishment following the strong sell-through of our products in
the prior quarter. This in turn helped maintain healthy inventory
levels in our operation and at retail. The sweeter mix of our
Leadership Brands, the timing of marketing spend, and further
efficiencies generated from our shared services initiatives
contributed to higher adjusted operating margins in all three of
our business segments. During the quarter we also repurchased over
400,000 of our shares, the impact of which is now reflected in our
revised annual EPS outlook.”
Mr. Mininberg continued: “To continue improving our shared
services, Project Refuel has now expanded to include the
realignment and streamlining of our supply chain structure, which
we believe will help mitigate potential cost headwinds in the
remainder of this fiscal year and further strengthen our
profitability longer term. Our strategies are working and we remain
confident in our ability to deliver growth and long-term
shareholder value.”
Housewares
Health &Home
Beauty Total First quarter of fiscal
2018 sales revenue, net $ 98,665 $ 148,289 $ 78,537 $ 325,491 Core
business growth (decline) 18,246 12,383 (4,898 ) 25,731 Impact of
foreign currency 392 2,759 306
3,457 Change in sales revenue, net 18,638 15,142
(4,592 ) 29,188 First quarter of fiscal 2019 sales
revenue, net $ 117,303 $ 163,431 $ 73,945 $ 354,679
Total net sales revenue growth 18.9 % 10.2 % (5.8 ) % 9.0 % Core
business 18.5 % 8.4 % (6.2 ) % 7.9 % Impact of foreign currency 0.4
% 1.9 % 0.4 % 1.1 % Operating margin (GAAP) First quarter
fiscal 2019 18.9 % 12.0 % 2.0 % 12.2 % First quarter fiscal 2018
18.2 % 9.6 % (2.0 ) % 9.4 % Adjusted operating margin (non-GAAP)
First quarter fiscal 2019 21.7 % 15.3 % 6.8 % 15.6 % First quarter
fiscal 2018 19.8 % 12.2 % 6.2 % 13.1 %
Consolidated Operating Results - First
Quarter Fiscal 2019 Compared to First Quarter Fiscal
2018
- Consolidated net sales revenue
increased 9.0% to $354.7 million compared to $325.5 million, which
includes a core business increase of 7.9% primarily due to growth
in international sales, new product introductions, an increase in
domestic brick and mortar sales, and strong growth in online sales.
The net sales increase also includes an increase of 1.1% from
foreign currency fluctuations. During the first quarter of fiscal
2019, the Company adopted the new revenue recognition accounting
standard ASU 2014-09 “Revenue from Contracts with Customers”. As a
result, the Company reclassified certain expenses from SG&A to
a reduction of net sales revenue. Amounts in prior periods have
been reclassified to conform with current period presentation.
Please refer to Note 7 of the accompanying schedules to the press
release for additional information.
- Consolidated gross profit margin
increased 0.9 percentage points to 41.3% compared to 40.4%. The
increase in consolidated gross profit margin is primarily due to
favorable product mix, growth in the Company’s Leadership Brands
and the favorable impact of net foreign currency fluctuations.
These factors were partially offset by unfavorable channel mix and
an increase in promotional programs.
- Consolidated SG&A as a percentage
of sales decreased by 1.2 percentage points to 28.6% of net sales
compared to 29.8%. The decrease is primarily due to improved
distribution and logistics efficiency, lower legal expense, lower
amortization expense, lower media advertising expense, and the
impact that higher overall net sales had on operating leverage.
These factors were partially offset by higher personnel and
share-based compensation expense and the unfavorable comparative
impact of foreign currency exchange and forward contract
settlements.
- Operating income was $43.3 million, or
12.2% of net sales, compared to $30.6 million, or 9.4% of net
sales, in the same period last year. Operating income for the first
quarter of fiscal 2019 includes pre-tax restructuring charges of
$1.7 million, compared to pre-tax non-cash asset impairment
charges of $4.0 million in the same period last year. The combined
effect of these items favorably impacted the year-over-year
comparison of operating margin by 0.7 percentage points. The
remaining improvement in consolidated operating margin primarily
reflects a higher mix of Leadership Brand sales at a higher
operating margin, lower media advertising expense, improved
distribution and logistics efficiency, and the impact that higher
overall net sales had on operating leverage. These factors were
partially offset by higher personnel and share-based compensation
expense and the unfavorable comparative impact of foreign currency
exchange and forward contract settlements.
- Our effective tax rate was 6.2%, which
includes tax benefits totaling $1.1 million from the lapse in the
statute of limitations related to uncertain tax positions and
share-based compensation settlements. This compares to an effective
tax rate of (1.1)% in the same period last year, which includes tax
benefits totaling $3.1 million from the lapse in the statute of
limitations related to uncertain tax positions and share-based
compensation settlements.
- Income from continuing operations was
$38.2 million, or $1.43 per diluted share on 26.6 million weighted
average shares outstanding, compared to $27.3 million, or $1.00 per
diluted share on 27.2 million weighted average diluted shares
outstanding. Income from continuing operations for the first
quarter of fiscal 2019 included after-tax restructuring charges of
$1.6 million ($0.06 per share). This compares to after-tax non-cash
asset impairment charges of $3.6 million ($0.13 per share) in the
same period last year.
- Loss from discontinued operations, net
of tax, was ($0.4) million compared to ($21.4) in the same period
last year. Diluted loss per share from discontinued operations was
($0.01) compared to ($0.79) in the same period last year.
- Adjusted EBITDA (EBITDA excluding
restructuring charges, non-cash asset impairment charges, and
non‐cash share based compensation, as applicable) increased 28.6%
to $59.4 million compared to $46.2 million in the same period last
year.
On an adjusted basis for the first quarters of fiscal 2019 and
2018, excluding restructuring charges, non-cash asset impairment
charges, non‐cash share based compensation, and non-cash
amortization of intangible assets, as applicable:
- Adjusted operating income was $55.5
million, or 15.6% of net sales, compared to $42.6 million, or 13.1%
of net sales. The 2.5 percentage point increase in adjusted
operating margin primarily reflects a higher mix of Leadership
Brand sales at a higher operating margin, lower media advertising
expense, improved distribution and logistics efficiency, and the
impact that higher overall net sales had on operating leverage.
These factors were partially offset by higher personnel expense and
the unfavorable comparative impact of foreign currency exchange and
forward contract settlements.
- Adjusted income from continuing
operations increased $11.5 million, or 30.1%, to $49.8 million, or
$1.87 per diluted share, compared to $38.3 million, or $1.41 per
diluted share. The 32.6% increase in adjusted diluted EPS from
continuing operations primarily reflects the impact of higher
adjusted operating income in all three of the Company’s business
segments, lower interest expense and lower weighted average diluted
shares outstanding year-over-year.
Segment Operating Results - First
Quarter Fiscal 2019 Compared to First Quarter Fiscal
2018
Housewares net sales increased by 18.9% reflecting incremental
distribution with existing domestic customers, an increase in
online sales, new product introductions for both the Hydro Flask
and OXO brands, an increase in sales into the club channel, an
acceleration of Hydro Flask orders by retailers in advance of the
Hydro Flask integration into the Helen of Troy ERP system, and
international growth. Segment net sales also benefitted from the
favorable impact of net foreign currency fluctuations of
approximately $0.4 million, or 0.4%. These factors were partially
offset by lower store traffic and soft consumer spending at certain
traditional brick and mortar retailers. GAAP operating margin was
18.9% compared to 18.2%. The increase in operating margin is
primarily due to a higher mix of Hydro Flask sales at a higher
operating margin, lower overall advertising expense, improved
distribution and logistics efficiency, and the favorable impact of
increased operating leverage from net sales growth. These factors
were partially offset by unfavorable margin impact of sales into
the club channel and the impact of restructuring charges. Segment
adjusted operating income increased 29.9% to $25.4 million, or
21.7% of segment net sales, compared to $19.6 million, or 19.8% of
segment net sales, in the same period last year.
Health & Home net sales increased 10.2% reflecting
expanded international distribution and higher online sales.
Segment net sales also benefitted from the favorable impact of net
foreign currency fluctuations of approximately $2.8 million, or
1.9%. These factors were partially offset by the unfavorable
comparative impact from the retail fill-in of a new product
introduction in the same period last year. GAAP operating margin
was 12.0% compared to 9.6%. The increase in operating margin
reflects a favorable margin mix, improved distribution and
logistics efficiency, and increased operating leverage from net
sales growth. These factors were partially offset by higher
personnel and share-based compensation expense, the unfavorable
comparative impact of foreign currency exchange and forward
contract settlements, restructuring charges, and higher product
liability expense. Segment adjusted operating income increased
37.9% to $25.0 million, or 15.3% of segment net sales, compared to
$18.2 million, or 12.2% of segment net sales, in the same period
last year.
Beauty net sales decreased 5.8% primarily reflecting a decline
in brick and mortar, which more than offset continued momentum in
the online channel. Segment net sales were also impacted by the
unfavorable comparison from the retail fill-in of new product
introductions in the same period last year, as well as the impact
from the rationalization of certain brands and products. Segment
net sales were favorably impacted by net foreign currency
fluctuations of approximately $0.3 million, or 0.4%. GAAP operating
margin was 2.0% compared to (2.0)%. The first quarter of fiscal
2019 includes restructuring charges of $0.6 million, compared to
asset impairment charges of $4.0 million in the same period last
year, which had a combined favorable impact on the year-over-year
comparison of operating margin of 4.3 percentage points. The
remaining decline in operating margin is primarily due to less
favorable sales mix, lower operating leverage, higher share-based
compensation expense, and the unfavorable comparative impact of
foreign currency exchange and forward contract settlements,
partially offset by improved distribution and logistics efficiency,
lower media advertising expense and cost savings from Project
Refuel. Segment adjusted operating income improved 3.9% to $5.0
million, or 6.8% of segment net sales, compared to $4.9 million, or
6.2% of segment net sales, in the same period last year.
Balance Sheet and Cash Flow Highlights
- First Quarter Fiscal 2019 Compared to First Quarter Fiscal
2018
- Cash and cash equivalents totaled $16.9
million, compared to $17.1 million
- Total short- and long-term debt was
$300.1 million, compared to $453.8 million, a net decrease of
$153.7 million
- Accounts receivable turnover was 62.6
days, compared to 60.4 days
- Inventory was $256.3 million, compared
to $304.9 million, a net decrease of 16.0%. Inventory turnover was
3.1 times compared to 2.8 times
- Net cash provided by operating
activities declined $10.9 million to $28.9 million primarily due to
a settlement payment of $15 million made during the first quarter
of fiscal 2019
Fiscal 2019 Annual
Outlook
For fiscal 2019, the Company continues to expect consolidated
net sales revenue in the range of $1.485 to $1.510 billion, which
implies consolidated sales growth of 0.4% to 2.1% after accounting
for the expected impact from the adoption of ASU 2014-09 “Revenue
from Contracts with Customers” (Revenue Recognition Standard) in
fiscal 2019 with conforming reclassifications to fiscal 2018.
Please refer to the table entitled “Fiscal Year 2019 Outlook for
Net Sales Revenue After Adoption of Revenue Recognition Standard”
in the accompanying tables to this press release for additional
information.
The Company’s net sales outlook assumes the severity of the
cough/cold/flu season will be in line with historical averages,
which unfavorably impacts the year-over-year comparison by 1.1%.
The Company’s net sales outlook also assumes that June 2018 foreign
currency exchange rates will remain constant for the remainder of
the fiscal year. Finally, the Company’s net sales outlook reflects
the following expectations by segment:
- Housewares net sales growth in the
mid-single digits;
- Health & Home net sales growth in
the low-single digits, with an unfavorable impact of approximately
2.5% from the average cough/cold/flu season assumption; and
- Beauty net sales decline in the low- to
mid-single digits.
Reflecting the impact of share repurchases in the first quarter
of fiscal 2019, the Company now expects consolidated GAAP diluted
EPS from continuing operations of $6.27 to $6.42 and non-GAAP
adjusted diluted EPS from continuing operations in the range of
$7.45 to $7.70, which excludes any asset impairment charges,
restructuring charges, share-based compensation expense and
intangible asset amortization expense.
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 in support of the
Company’s Leadership Brands of 14% to 18% in fiscal 2019. The
year-over-year comparison is also unfavorably impacted by
approximately $0.12 to $0.14 from the average cough/cold/flu season
assumption and approximately $0.15 from fiscal 2018 tax benefits
that are not expected to repeat in fiscal 2019.
The Company’s diluted EPS from continuing operations outlook
assumes that June 2018 foreign currency exchange rates will remain
constant for the remainder of the fiscal year. The diluted earnings
per share outlook is based on an updated estimated weighted average
diluted shares outstanding of 26.6 million.
The Company continues to expect net cash provided by operating
activities growth in the range of 10% to 12% for fiscal 2019. The
Company expects capital expenditures in the range of $30.0 million
to $35.0 million, which includes approximately $15.0 million in
expected leasehold improvements from multiple office relocations
not expected to repeat in the near future.
As previously announced, the Company has initiated Project
Refuel, which is now targeting annualized profit improvement of
approximately $8.0 million to $10.0 million over the duration of
the plan. During the first quarter of fiscal 2019, the Company
expanded Project Refuel to include the realignment and streamlining
of its supply chain structure. The plan is estimated to be
completed by the first quarter of fiscal 2020, and the Company now
expects to incur total cumulative restructuring charges in the
range of $4.0 million to $5.5 million over the period of the
plan.
The Company continues to expect a reported GAAP effective tax
rate range of 8.9% to 10.9%, and an adjusted effective tax rate
range of 8.3% to 10.3% for the full fiscal year 2019. The Company’s
outlook assumes that tax benefits of approximately $4.1 million
recorded in fiscal 2018 will not repeat in fiscal 2019, which
unfavorably impacts the year over year tax rate comparison by
approximately 2.1 percentage points. 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 2019
acquisitions and divestitures, 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 9:00
a.m. Eastern Time today, Monday, July 9, 2018. Investors and
analysts interested in participating in the call are invited to
dial (800) 239-9838 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 July 9, 2018 until 11:59
p.m. Eastern Time on July 16, 2018 and can be accessed by dialing
(844) 512-2921 and entering replay pin number 5493473. 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 financial measures, such as
Leadership Brand net sales, 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 our
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 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
28, 2018, 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, the costs of complying
with the business demands and requirements of large sophisticated
customers, our relationships with key customers and licensors, our
dependence on the strength of retail economies and vulnerabilities
to any prolonged economic downturn, our 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, our recent and future
acquisitions or divestitures, including our ability to realize
anticipated cost savings, synergies and other benefits along with
our 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, disruptions in U.S., U.K.,
Eurozone, 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, 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, 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, trade barriers,
exchange controls, expropriations, and other risks associated with
U.S. and foreign operations, the risks to our liquidity as a result
of changes to capital market conditions and other constraints or
events that impose constraints 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 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, 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
Condensed Consolidated Statements of
Income
(Unaudited)
(in thousands, except per share
data)
Three Months Ended May
31, 2018 2017 Sales revenue, net $ 354,679 100.0
% $ 325,491 100.0 % Cost of goods sold 208,121 58.7
% 193,921 59.6 % Gross profit 146,558
41.3 % 131,570 40.4 % Selling, general and administrative
expense ("SGA") 101,506 28.6 % 96,987 29.8 % Asset impairment
charges - - % 4,000 1.2 % Restructuring charges (3) 1,725
0.5 % - - % Operating income
43,327 12.2 % 30,583 9.4 % Nonoperating income, net 75 - %
166 0.1 % Interest expense (2,687 ) (0.8 ) % (3,725 )
(1.1 ) % Income before income tax 40,715 11.5 % 27,024 8.3 %
Income tax expense (benefit) 2,542 0.7
% (284 ) (0.1 ) % Income from continuing operations
38,173 10.8 % 27,308 8.4 % Loss from discontinued
operations, net of tax (381 ) (0.1 ) % (21,440 ) (6.6
) % Net income $ 37,792 10.7 % $ 5,868 1.8
% Earnings (loss) per share - diluted: Continuing
operations $ 1.43 $ 1.00 Discontinued operations (0.01 )
(0.79 ) Total earnings per share - diluted $ 1.42 $
0.22 Weighted average shares of common stock
used in computing diluted earnings per share 26,614 27,245
Consolidated and Segment Net Sales,
Operating Margin and Adjusted Operating Margin
(non-GAAP)(1)
(Unaudited)
(in thousands)
Housewares Health & Home
Beauty Total First quarter of fiscal 2018
sales revenue, net $ 98,665 $ 148,289 $ 78,537 $ 325,491 Core
business growth (decline) 18,246 12,383 (4,898 ) 25,731 Impact of
foreign currency 392 2,759 306
3,457 Change in sales revenue, net 18,638 15,142
(4,592 ) 29,188 First quarter of fiscal 2019 sales
revenue, net $ 117,303 $ 163,431 $ 73,945 $ 354,679
Total net sales revenue growth 18.9 % 10.2 % (5.8 ) % 9.0 % Core
business 18.5 % 8.4 % (6.2 ) % 7.9 % Impact of foreign currency 0.4
% 1.9 % 0.4 % 1.1 % Operating margin (GAAP) First quarter
fiscal 2019 18.9 % 12.0 % 2.0 % 12.2 % First quarter fiscal 2018
18.2 % 9.6 % (2.0 ) % 9.4 % Adjusted operating margin (non-GAAP)
First quarter fiscal 2019 21.7 % 15.3 % 6.8 % 15.6 % First quarter
fiscal 2018 19.8 % 12.2 % 6.2 % 13.1 %
Leadership Brand Net Sales Revenue
(1) (2)
(Unaudited)
(in thousands)
Three Months Ended May 31, 2018
2017 Leadership Brand sales revenue, net $ 280,759 $ 244,845
All other sales revenue, net 73,920 80,646 Total
sales revenue, net $ 354,679 $ 325,491
HELEN OF TROY
LIMITED AND SUBSIDIARIES
Selected Consolidated Balance Sheet,
Cash Flow and Liquidity Information (6)
(Unaudited)
(in thousands)
May 31, 2018 2017 Balance
Sheet: Cash and cash equivalents $ 16,929 $ 17,106 Receivables, net
255,674 212,419 Inventory, net 256,268 304,949 Total assets,
current 543,968 546,755 Total assets 1,602,974 1,606,866 Total
liabilities, current 258,863 285,433 Total long-term liabilities
320,414 454,955 Total debt 300,123 453,841 Consolidated
stockholders' equity 1,023,697 1,024,439 Liquidity: Working
capital $ 285,105 $ 261,322
Three Months Ended May
31, 2018 2017 Cash Flow: Depreciation and
amortization $ 7,982 $ 8,341 Net cash provided by operating
activities 28,911 39,836 Capital and intangible asset expenditures
4,182 4,082 Net debt proceeds (repayments) 10,000 (32,100 )
Payments for repurchases of common stock 37,067 -
SELECTED OTHER DATA
Reconciliation of Non-GAAP Financial
Measures – GAAP Operating Income (Loss)
to Adjusted Operating Income
(non-GAAP)(1)
(Unaudited)
(in thousands)
Three
Months Ended May 31, 2018 Housewares Health &
Home Beauty Total Operating income, as reported
(GAAP) $ 22,183 18.9 % $ 19,657 12.0 % $ 1,487 2.0 % $ 43,327 12.2
% Restructuring charges (3) 760 0.6 % 358 0.2 %
607 0.8 % 1,725 0.5 % Subtotal 22,943 19.6 % 20,015
12.2 % 2,094 2.8 % 45,052 12.7 % Amortization of intangible assets
474 0.4 % 2,704 1.7 % 943 1.3 % 4,121 1.2 % Non-cash share-based
compensation 1,986 1.7 % 2,326 1.4 % 2,012 2.7
% 6,324 1.8 % Adjusted operating income (non-GAAP) $ 25,403
21.7 % $ 25,045 15.3 % $ 5,049 6.8 % $ 55,497 15.6 %
Three Months Ended May
31, 2017 Housewares Health & Home
Beauty Total Operating income (loss), as reported
(GAAP) $ 17,936 18.2 % $ 14,244 9.6 % $ (1,597 ) (2.0 ) % $ 30,583
9.4 % Asset impairment charges - - % - - %
4,000 5.1 % 4,000 1.2 % Subtotal 17,936 18.2 %
14,244 9.6 % 2,403 3.1 % 34,583 10.6 % Amortization of intangible
assets 644 0.7 % 2,786 1.9 % 1,418 1.8 % 4,848 1.5 % Non-cash
share-based compensation 971 1.0 % 1,128 0.8 %
1,039 1.3 % 3,138 1.0 % Adjusted operating
income (non-GAAP) $ 19,551 19.8 % $ 18,158 12.2 % $ 4,860
6.2 % $ 42,569 13.1 %
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 May 31, 2018
Housewares Health & Home Beauty
Total Operating income, as reported (GAAP) $ 22,183 $ 19,657
$ 1,487 $ 43,327 Depreciation and amortization, excluding amortized
interest 1,484 4,148 2,350 7,982 Nonoperating income, net -
- 75 75 EBITDA (non-GAAP) 23,667 23,805
3,912 51,384 Add: Restructuring charges (3) 760 358 607 1,725
Non-cash share-based compensation 1,986 2,326
2,012 6,324 Adjusted EBITDA (non-GAAP) $ 26,413 $
26,489 $ 6,531 $ 59,433
Three Months Ended May 31,
2017 Housewares Health & Home Beauty
Total Operating income (loss), as reported (GAAP) $ 17,936 $
14,244 $ (1,597 ) $ 30,583 Depreciation and amortization, excluding
amortized interest 1,427 4,138 2,776 8,341 Nonoperating income, net
- - 166 166 EBITDA (non-GAAP)
19,363 18,382 1,345 39,090 Add: Non-cash asset impairment charges -
- 4,000 4,000 Non-cash share-based compensation 971
1,128 1,039 3,138 Adjusted EBITDA (non-GAAP) $
20,334 $ 19,510 $ 6,384 $ 46,228
HELEN OF TROY
LIMITED AND SUBSIDIARIES
Reconciliation of GAAP Income and
Diluted Earnings Per Share (“EPS”) from Continuing Operations
to
Adjusted Income and Adjusted EPS from
Continuing Operations (non-GAAP)(1)
(Unaudited)
(dollars in thousands, except per share
data)
Three Months Ended May 31, 2018
Income from Continuing Operations Diluted EPS
Before Tax Tax Net of
Tax Before Tax Tax Net of
Tax As reported (GAAP) $ 40,715 $ 2,542 $ 38,173 $ 1.53 $ 0.10
$ 1.43 Restructuring charges (3) 1,725 142
1,583 0.06 0.01 0.06 Subtotal 42,440
2,684 39,756 1.59 0.10 1.49 Amortization of intangible assets 4,121
135 3,986 0.15 0.01 0.15 Non-cash share-based compensation
6,324 269 6,055 0.24 0.01
0.23 Adjusted (non-GAAP) $ 52,885 $ 3,088 $ 49,797 $ 1.99
$ 0.12 $ 1.87 Weighted average shares of common
stock used in computing diluted EPS 26,614
Three Months Ended May 31, 2017 Income from
Continuing Operations Diluted EPS
Before Tax Tax Net of Tax
Before Tax Tax Net of Tax As
reported (GAAP)
$ 27,024 $ (284 ) $ 27,308 $ 0.99 $ (0.01 )
$ 1.00 Asset impairment charges 4,000
418 3,582 0.15
0.02 0.13 Subtotal 31,024 134 30,890 1.14 0.01
1.13 Amortization of intangible assets 4,848 249 4,599 0.18 0.01
0.17 Non-cash share-based compensation 3,138
339 2,799 0.12 0.01 0.10
Adjusted (non-GAAP)
$ 39,010 $ 722 $ 38,288 $ 1.43 $
0.03 $ 1.41 Weighted average shares of common stock
used in computing diluted EPS 27,245
HELEN OF TROY
LIMITED AND SUBSIDIARIES
Condensed Consolidated Statements of
Income and Reconciliation of Non-GAAP Financial Measures –
Adjusted Operating Income, Adjusted
Diluted Earnings Per Share (“EPS”) from Continuing
Operations(1)
(Unaudited)
(in thousands, except per share
data)
Three Months Ended May 31,
2018 As Reported Adjusted (GAAP)
Adjustments (Non-GAAP) Sales revenue, net $
354,679 100.0 % $ - $ 354,679 100.0 % Cost of goods sold
208,121 58.7 % - 208,121
58.7 % Gross profit 146,558 41.3 % - 146,558 41.3 %
SG&A 101,506 28.6 % (4,121 )
(4)
91,061 25.7 % (6,324 )
(5)
Asset impairment charges - - % - - - % Restructuring charges (3)
1,725 0.5 % (1,725 )
(3)
- - % Operating income 43,327 12.2 % 12,170
55,497 15.6 % Nonoperating income, net 75 - % - 75 - %
Interest expense (2,687 ) (0.8 ) % -
(2,687 ) (0.8 ) % Income before income tax 40,715 11.5 % 12,170
52,885 14.9 % Income tax expense 2,542 0.7
% 546 3,088 0.9 % Income
from continuing operations 38,173 10.8 %
11,624 49,797 14.0 %
Diluted EPS from continuing operations $ 1.43 $ 0.44
$ 1.87 Weighted average shares of common stock used
in computing diluted EPS 26,614 26,614
Three Months Ended May 31, 2017 As
Reported Adjusted (GAAP) Adjustments
(Non-GAAP) Sales revenue, net (7) $ 325,491 100.0 % $
- $ 325,491 100.0 % Cost of goods sold 193,921 59.6
% - 193,921 59.6 % Gross
profit 131,570 40.4 % - 131,570 40.4 % SG&A (7) 96,987
29.8 % (4,848 )
(4)
89,001 27.3 % (3,138 )
(5)
Asset impairment charges 4,000 1.2 %
(4,000 ) - - % Operating income 30,583 9.4 % 11,986
42,569 13.1 % Nonoperating income, net 166 0.1 % - 166 0.1 %
Interest expense (3,725 ) (1.1 ) % -
(3,725 ) (1.1 ) % Income before income tax 27,024 8.3 % 11,986
39,010 12.0 % Income tax expense (benefit) (284 )
(0.1 ) % 1,006 722 0.2 % Income
from continuing operations 27,308 8.4 %
10,980 38,288 11.8 % Diluted EPS
from continuing operations $ 1.00 $ 0.40 $ 1.41
Weighted average shares of common stock used in
computing diluted EPS 27,245 27,245
HELEN OF TROY
LIMITED AND SUBSIDIARIES
Fiscal 2019 Outlook for Net Sales
Revenue After Adoption of Revenue Recognition Standard
(Unaudited)
(in thousands)
Fiscal 2018 Outlook for Fiscal 2019 Net
sales revenue prior to adoption $ 1,489,747 $ 1,498,000 -
$ 1,523,000 Reclassification of expense from SG&A to net
sales revenue (10,901 ) (13,000 ) - (13,000 )
Expected net sales revenue after adoption $ 1,478,846 $
1,485,000 - $ 1,510,000 Fiscal 2019 net sales
revenue growth after adoption 0.4 % - 2.1 %
Reconciliation of Fiscal 2019 Outlook
for GAAP Diluted Earnings Per Share (“EPS”) from Continuing
Operations to Adjusted Diluted EPS from
Continuing Operations (non-GAAP) (1)
(Unaudited)
Three Months Ended May 31, 2018
Outlook for the Balance of
the Fiscal Year (Nine Months)
Outlook Fiscal 2019 Diluted EPS from continuing
operations, as reported (GAAP) $ 1.43 $ 4.84 - $ 4.99
$ 6.27 - $ 6.42 Restructuring charges, net of tax
0.06 0.02 - 0.07 0.08
- 0.13 Subtotal 1.49 4.86 - 5.06 6.35 - 6.55
Amortization of intangible assets, net of tax 0.15 0.35 - 0.35 0.50
- 0.50 Non-cash share-based compensation, net of tax 0.23
0.37 - 0.42 0.60 -
0.65 Adjusted diluted EPS from continuing operations
(non-GAAP) $ 1.87 $ 5.58 - $ 5.83 $ 7.45 -
$ 7.70
Effective Tax Rate (GAAP) and Adjusted
Effective Tax Rate (Non-GAAP)(1)
(Unaudited)
Three Outlook for the Months
Ended Balance of May 31, the Fiscal Year
2018 (Nine Months) Outlook Fiscal 2019
Effective tax rate, as reported (GAAP) 6.2 % 9.6 % - 12.2 % 8.9 % -
10.9 % Restructuring charges 0.1 % 0.1 % - 0.1
% 0.1 % - 0.1 % Subtotal 6.3 % 9.7 % - 12.3 % 9.0 % -
11.0 % Amortization of intangible assets (0.3 ) % (0.4 ) % - (0.4 )
% (0.4 ) % - (0.4 ) % Non-cash share based compensation (0.2 ) %
(0.3 ) % - (0.3 ) % (0.3 ) % - (0.3 ) % Adjusted effective tax rate
5.8 % 9.0 % - 11.6 % 8.3 % - 10.3
%
HELEN OF TROY LIMITED AND SUBSIDIARIES
Notes to Press Release
(1) This press release contains non-GAAP financial measures.
Leadership Brand net sales revenue, adjusted operating income,
adjusted operating margin, adjusted effective tax rate, adjusted
income, adjusted diluted earnings per share, 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, we are providing the preceding tables that
reconcile these measures to their corresponding GAAP-based measures
presented in our 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. We believe 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 net income and earnings per share. We also
believe that these non-GAAP measures facilitate a more direct
comparison of the Company’s performance with its competitors. We
further believe 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 financial measures are used by
management for measuring and evaluating the Company’s performance.
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) Leadership Brand net sales consists of
revenue from the OXO, Honeywell, Braun, PUR, Hydro Flask, Vicks and
Hot Tools brands. (3) Charges incurred in conjunction with the
Company’s restructuring plan (Project Refuel) for the three months
ended May 31, 2018, with no comparable charges in the same period
last year. (4) Amortization of intangible assets. (5) Non-cash
share-based compensation. (6) Amounts presented are from continuing
operations with the exception of stockholders’ equity, which is
presented on a consolidated basis and includes discontinued
operations. (7) We adopted ASU 2014-09 in the first quarter of
fiscal 2019 and have reclassified amounts in the prior year’s
statement of income to conform to the current period’s
presentation, as follows:
Before Reclassification
After Reclassification Three Months Three
Months Ended May 31, Ended May 31, Statement
of Income (in thousands) 2017
Reclassification 2017 Sales
revenue, net (1) $ 327,986 $ (2,495 ) $ 325,491 SG&A (1)
$ 99,482 $ (2,495 ) $ 96,987
View source
version on businesswire.com: https://www.businesswire.com/news/home/20180709005254/en/
Investor Contact:Helen of Troy LimitedAnne Rakunas,
915-225-4841Director, External CommunicationsorICR, Inc.Allison
Malkin, 203-682-8200Sr. Managing Director
Helen of Troy (NASDAQ:HELE)
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