Helen of Troy Limited (HELE) on Q2 2021 Results - Earnings Call Transcript

Operator: Greetings and welcome to the Helen of Troy Second Quarter Fiscal 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. [Operator Instructions] It is now my pleasure to introduce your host Mr. Jack Jancin, Senior Vice President of Corporate Business Development. Thank you, sir. Please go ahead. Jack Jancin: Thank you, operator. Good morning everyone and welcome to Helen of Troy’s second quarter fiscal year 2021 earnings conference call. The agenda for the call this morning is as follows. I will begin with a brief discussion of forward-looking statements. Mr. Julien Mininberg, the company’s CEO will comment on some high-level results for the quarter and discuss current business trends. Then Mr. Brian Grass, the company’s CFO will review the financials in more detail and reflect on considerations from the ongoing COVID-19 pandemic uncertainty as fiscal year 2021 progresses. Both Julien and Brian will speak to you about our announced leadership plans. Following this, we will open the call to take your questions. This conference call may contain certain forward-looking statements that are based on management’s current expectation with respect to future events or financial performance. Generally, the words anticipates, believes, expects, and other words similar are words identifying forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties that could cause anticipated results to differ materially from the actual results. This conference call may also include information that may be considered non-GAAP financial information. These non-GAAP measures are not an alternative to GAAP financial information and maybe calculated differently than the non-GAAP financial information disclosed by other companies. The company cautions listeners not to place undue reliance on forward-looking statements or non-GAAP information. Before I turn the call over to Mr. Mininberg, I would like to inform all interested parties that a copy of today’s earnings release has been posted to the Investor Relations section of the company’s website at www.helenoftroy.com. The earnings release contains tables that reconcile non-GAAP financial measures to their corresponding GAAP-based measures. The release can be obtained by selecting the Investor Relations tab on the company’s homepage and then the news tab. I will now turn the conference call over to Mr. Mininberg. Julien Mininberg: Thank you, Jack. Good morning, everyone, and thank you for joining us today. I hope you and your families are staying safe and healthy. We recognize that people around the world continue to suffer as the virus and natural disasters take their toll. We extend our deepest sympathy to those who have lost loved ones to COVID-19, have been ill with the virus, and faced financial hardship, or are dealing with the devastating impact of hurricanes or wildfires. Turning to our earnings, Helen of Troy posted outstanding results this morning as our diversified portfolio continues to perform very well. We have been able to successfully adapt to and navigate through countless COVID related challenges. From the start of this pandemic, we took decisive action to lead our business and organization through uncharted waters. We had two goals in mind. Our first was to safeguard employee health while continuing to provide our consumers and customers with the high level of service they've become accustomed to. Our second goal has been to adapt to the new normals with the speed and agility needed to stay focused on delivering business results, with the here and now, while also advancing our multi-year Phase 2 strategic plan for sustained long-term results. We remain laser focused on those goals and on our Phase 2 transformation targets. We began leaning back into our key Phase 2 priorities in the second quarter. The continued strength of the business now puts us in a position to do so even further in the back half of our fiscal year. We believe these investments will continue to benefit all stakeholders as we drive our value creation flywheel. The results we are reporting today would not be possible without the tremendous commitment of our exceptional people. The dedication of the essential frontline workers in our distribution centers, in our test labs, and in our operational hubs around the world continue to make the difference every single day. All around the world our associates are delivering elevated throughput to meet as much demand as possible in the challenging conditions from COVID, and its ripple effects around the world. I’m very proud to see how Helen of Troy’s people in all parts of our business have embraced the shared sacrifice we asked of them during the early months of this crisis, to preserve the organization and capabilities we all worked so hard to build in the transformation. Their trust and their hard work continue to pay off, as the resilience of our business, organization, and culture gets tested and confirmed. As a result, in early July, we shared that we would restore all wages, salaries, and director compensation to pre-COVID levels, effective August 1. I am pleased to share that later in the second quarter we also made our people whole, on all back pay, resulting from the temporary wage and salary reductions. We believe this is core to our values and highly consistent with our stated strategic goal to attract, attain, unify and train the very best people. It's also simply the right thing to do. With regard to the status of our offices and our work from home arrangements, we expect to continue our current mix of essential workers operating our distribution centers, and keeping many of our international offices open, such as those in Europe and Asia. While other Helen of Troy associates will most likely continue to work from home through the end of this fiscal year. We will continue to closely monitor the ever changing COVID-19 situation to make sure our approach to facilities and work environments based timely, thoughtful, carefully measured and complies with expert guidance and local regulations. Before I discuss our business results further, I would like to touch on the two executive leadership announcements highlighted in today's press release. Helen of Troy’s Board of Directors has asked me to extend my service as Helen of Troy’s CEO beyond the February 28, 2023 end date in my current employment agreement. I am honored by their continued faith in me and enthusiastic about serving an additional year. I believe there is considerable opportunity ahead for continued growth of our revenues, profitability, brand portfolio, our global footprint, and our capabilities. When the amended employment agreement is finalized, we will make a formal announcement. I feel very fortunate to have had the opportunity to lead the company not only through the remaining three and a half years of Phase 2 of our transformation plan, but also to provide continuity of leadership through all 10 years of transformation. I am right where I enjoy being at the heart of our strategic thinking with a special responsibility to further reinvent our business, deliver sustained performance, and continue building organizational and cultural excellence. I look forward to stewarding the company through the end of fiscal 2024, and through smooth succession planning for the next generation of leaders for fiscal 2025 and beyond. The second executive management announcement we made today is that our friend, colleague, and Chief Financial Officer, Brian Grass intends to retire a little over a year from now, effective November 1, 2021. Brian is a valued partner to me and to our global leadership team. I greatly appreciate his expertise, integrity, high standards, and countless contributions during what will be more than a 15-year career at Helen of Troy. He has been influential in helping advance our transformation into a company that is built to last. Brian is rightfully proud of what he and the company have achieved, as well as the considerable progress he and his team have accomplished raising the levels of excellence for our global corporate finance team and for many of our systems. He has also been highly focused on establishing a compelling bench of internal CFO succession talent that we intend to groom over the next year. We also intend to conduct a comprehensive external search to ensure we have the very best next CFO for Helen of Troy. We expect that person to provide the outstanding level of financial leadership we are accustomed to and to continue to deliver on our transformation. Brian will speak more about his plans to retire during his remarks. Over the next year, he will continue to remain fully in his role, providing highly effective executive management and financial governance and will assist with a seamless transition when the time comes. Now, on to our business results. Our diversified business model and portfolio served us well in the second quarter and drove an outstanding first half for fiscal 2021. As highlighted in our press release, we continue to see strong customer demand for our products across each of our three business segments globally. Net sales growth was 28.2%; adjusted diluted EPS grew a robust 68.3%. That growth was broad based as all business segments and international grew at least 20% in the quarter. Margins expanded behind mixed improvements, discipline investment spending, and operating leverage within our business units and in our shared service platforms. Our leadership brands performed extremely well, going 30.3%, including a 3.2 contribution from Drybar. Online sales grew 32% and represented approximately 24% of our total sales in the quarter. The pandemic continue to accelerate via consumer trend from bricks to clicks. The first half of this fiscal year marked an excellent start to the second year of Phase 2. First half net sales grew by 20.4%, powered by leadership brand growth of 23.3%. International sales were notable growing double-digit in the first half of the year. The major projects in EMEA and Asia under our Phase 2 strategy to double down on international are performing ahead of internal expectations, and creating attractive new investment opportunities to continue driving international growth. Sales to the online channel increased by 32% to represent approximately 26% of our total fiscal year to date sales. Adjusted diluted EPS increased by 46.5% in the first half, and we generated $186 million of operating cash flow. Combination of winning first half results and strong prospects for the business in the back half of this fiscal year allow us to restore even more of the major [Phase 2] investments originally planned for this year, and what we communicated in our July call. We believe this will help power the long-term sustainability of our value creation flywheel. The additional spending allows us to make key hires and drive ahead on direct-to-consumer, customization, product innovation, and marketing. It also allows us to provide more marketing support for the distribution gains we have earned further diversify our supply chain beyond China, and make investments to expand our supply capacity and our infrastructure. Infrastructure investments are especially important in these middle years of Phase 2, as we expand our distribution and IT capabilities to keep up with what has been more than 30% growth since our original transformation began. And to prepare us to handle our future growth prospects. We are also leaning into additional select marketing opportunities across our business and regional portfolio such as Hydro Flask, no-touch thermometers, and in supporting our volumizer franchise. Even with demand continuing to surge in health related categories, we believe it is prudent to continue to manage our marketing spend in the back half given the biological uncertainty about the path of COVID and given the veracity of the current cold and flu season, as well as other unknowns around consumer demand. Our efforts to improve supply are working, yet are still unlikely to satisfy all of the current demand. Taken together, these uncertainties make us unable to give specific quantitative financial guidance at this time. Brian will provide some additional perspective on this in his remarks. Regarding current trends, we like what we see so far. September was another very strong month across nearly all parts of the business. Major trends in health related products continue, especially as the indoor season begins in northern climates as hybrid school model startup and as the overall nesting trend continues. While those have been positive business drivers for us, we expect the torrid pace of revenue growth to moderate somewhat in the back half as the anniversary the very strong finish to our last fiscal year. Switching now to results for the second quarter in our business segments, we are extremely pleased with our performance in beauty delivering 23% organic sales growth, the highest we have seen in more than a decade. The Drybar acquisition contributed a further 12.1 percentage point to the segment's total sales growth of 34.6% in the quarter. Your organic growth comes on top of the 9.3% organic sales growth in the same period last year, despite the current challenges around retailers were grappling with stay at home recommendations and measured re-opening of their brick and mortar stores. Testament to our innovation stream and the strength of the one-step volumizer franchise as it continues to generate rave customer reviews for an expanding distribution and grow its market share. Syndicated data shows that during the latest 52-week period, Helen of Troy further grew its number one market share position in the online channel for U.S. hair care appliances and continues to hold a significantly lead. Syndicated data in brick and mortar shows that during the latest 52-week period, we also grew our number two share position in the market for U.S. retail appliances. Our first mover, volumizer appliance innovations continue to be a major driver and are a key expansion focus for us even as competitive copycat products enter the market. Our Revlon and Hot Tools one step volumizers have earned more than 90,000 online consumer reviews with ratings of 4.5 stars and up depending on the site, and considerable media attention, both in traditional vehicles, and on social media platforms. Sales of our newest leadership brand, Drybar were all incremental in the quarter. The beauty industry has been among the hardest hit by COVID, shutting down hair salons and slowing re-openings and traffic at major retailers in the prestige channel and in other parts of retail brick and mortar. Despite this challenge Drybar revenue improved sequentially each month of the second quarter, as Drybar salons expanded their careful market by market reopening plans prioritize the safety of its clients. By mid-September, Drybar salons had largely reopened for business, especially those outside of coastal cities, but remain impacted by COVID. Prestige retail faced similar challenges during the quarter responding by accelerating the use of e-commerce, buy online and pick-up in store or BOPIS and curbside pickup, as they gradually reopened more of their brick and mortar stores. For key customers like ULTA, Sephora and Nordstrom traffic remains a challenge, but we continue to see positive sequential purchase trends for stores that have reopened. With regard to our previously disclosed divestiture plan for the personal care business, process is advancing and we anticipate being able to share more progress when we report our earnings for the third quarter in January. Now turning to health and home and outstanding performance. Momentum continued in the second quarter as the segment’s simple mission was more relevant than ever. Be there when consumers need us most with trusted solutions for healthy living and peace of mind. Organic sales grew 33.1% as all four of our health and home leadership brands grew sharply in the quarter. Demand remains very strong for Vicks, Braun, Honeywell, and PUR products that address needs around temperature, humidity, water quality, and air quality. The trends in the second quarter were especially powerful, new COVID developments emerge almost every day, the northern hemisphere generally experienced a very hot and dry summer, and devastating wildfires continue to rage across large swaths of the western United States. Beyond the immediate impact of these events on the business, we believe the heightened media attention on our categories and brands has had important positive, short and long-term implications for category development and household penetration, especially as this attention comes at a time when consumers are focused on current events on learning more about protecting health. Braun remains our most global brand, and is seeing significantly elevated demand. All Braun thermometer types are very relevant today, but none more so than our no-touch or non-contact thermometers, which measure and record a person's temperature with clinical accuracy, yet require no physical contact. The use of thermometers is changing from what was primarily a diagnostic tool to understand the severity of an illness and help to distinguish between a cold and the flu to now a pre-screening device recommended by experts for use in identifying the potential presence of a virus like COVID-19. Thermometers have become the first line of defense to help protect not only our loved ones in the home, but can now also monitor public health and safety in schools, restaurants, stores, work sites, institutions, and in transportation systems. Earlier this year, we shared that we began investing additional capital and human resources into expanding thermometer production capacity, including [no-touch and ear]. On top of the increasing capacity we secured in the first quarter, further production increases helped us satisfy even more of the demand in the second quarter. We are also adding incremental supply that should be operational in the third quarter and yet more coming online in the fourth quarter. With this ramp up we expect to be more than double our total pre-COVID capacity by the end of the year. This will much better match thermometer output to the ongoing pandemic and better handle our fourth quarter during which the cough, cold, and flu season traditionally peaks. Air purification has also been a very hot category. U.S. sales for our Honeywell air purifiers grew strongly during the quarter. The key drivers were increasing concerns around COVID, especially as indoor season approaches for many households, as well as institutions such as restaurants, schools, and universities. Our air purifier sales were further aided by heightened media attention, highlighting the potential health benefits of using an air purifier during the pandemic. We also saw an early start to the wildfire season this year. Multiple August blazes in the western United States unfortunately stand out even among recent record breaking fire seasons for their scale and their intensity. Finding air quality from wildfires can also compound concerns around COVID-19 as more people are confined to enclose spaces and polluted air can create risk of airway damage, respiratory infection, the surge in air purifier demand has been much stronger than we expected straining our supply chain. We have responded quickly with a 50% increase in air purifier supply becoming operational by the end of next month. Demand for water purification also continued in the quarter underscored by two key trends. The first is from COVID-19 as many people who continue to shelter in place and work from home are seeking additional avenues to help protect themselves and their families. The second is that our PUR products are benefiting from an increasing trend of single-use plastic bottle bans around the world as mindsets shift towards more sustainable purchase and use the chance. Propelled by these trends and increases in supply and in distribution, syndicated data shows that PUR’s growth has outpaced the growth of the category, resulting in market share gains for PUR’s U.S. devices and replacement filters in brick and mortar. Lastly in health and home, we have seen continued strong demand for our Vicks humidifier devices and VapoSteam inhalants. These products are designed to ease breathing by helping relieve the common symptoms of cold – of cough and congestion that can accompany a wide range of respiratory infections. According to syndicated data, our Vicks inhalant and humidifier businesses grew market share in the U.S. brick and mortar market during the quarter. In Housewares, second quarter sales increased by over 20% even as we faced a particularly strong comparison in which the segment grew more than 22% in the same period last year, both of our Housewares leadership brands grew during the quarter. It is clear the pandemic is changing nearly everything in our daily lives, including the way consumers look at food. As people continue adapting to shelter in place guidelines, new habits are formed. Many who used to rely on eating outside the home are now getting reacquainted with their kitchens. Studies confirm that consumers, especially millennial, are experiencing the joy of cooking more of sheltering in place and experimenting with a wider variety of meal options. It is this time of experimentation and newfound fun that is also expanding their use of essential products and gadgets for cooking, baking, brewing, cleaning, storage, and organization. All of these are in the sweet spot for our outstanding OXO lineup that helps consumers transform their homes and kitchens into engaging efficient spaces that make everyday better every day. We are excited about the prospects for the brand as OXO benefits from these positive new habits and greater adoption by a new and younger demographic. This is positively compounded by follow on sales OXO usually earned once a household is penetrated. OXO grew in brick and mortar, online, and internationally during the quarter as we gain distribution, launched new products, and benefited from very strong point of sale trends and store traffic at certain retailers. [Fast food storage], coffee, measuring and baking had particularly explosive growth. International sales for OXO were also an excellent source of growth, especially in EMEA and online. OXO’s domestic online sales benefited from significant increases in direct-to-consumer as the trends from bricks to clicks continued. Dotcoms such as Amazon, oxo.com, and target.com were also standouts. Market share gains were strong for OXO in the United States. Syndicated data shows that even as the U.S. Housewares category has grown fast, OXO’s dollar sales growth during the quarter has been roughly twice as fast. OXO’s partnership with 1% for the planet further aligns the brand with its consumer as it joins a global community of brands that reinforce their positive equity, giving back the equivalent of 1% of its sales to environmental non-profits. Hydro Flask returned to growth during the quarter as more people return to the outdoors and to key brick and mortar retailers, which slowly reopened. The brand overcame a particularly strong comparison in the same period last year and overcame this year's headwinds from closures and lower store traffic at key retailers. According to syndicated data, Hydro Flask continued to sustain its number one U.S. market share position and it's largely over competitors in insulated hydration vessels. International sales for Hydro Flask grew very fast in the quarter. Our retail stores were largely open by the end of the quarter, consumers continued to shop online where the brand delivered strong e-commerce and DTC sales. Hydro Flask brick and mortar point-of-sale also began to improve as foot traffic started to re-emerge in regions where consumers felt more comfortable leaving their homes. While it is likely COVID will persist for a longer time than any of us would like, we continue to like our prospects on Hydro Flask as it remains highly relevant and wildly popular, and with its on-trend positioning, products, distribution, and online presence. And to wrap up my comments, I would like to emphasize the focus we are placing on our Phase 2 initiatives. They are the key to continuing to drive our value creation flywheel. Heading into the back half of fiscal 2021, our portfolio is demonstrating excellent momentum allowing us to use our cash flow to continue selectively investing in Phase 2. Our balance sheet and financial position are very strong and capable of supporting accelerated investment. With our strong cash flow and low leverage, we are in a strong position to fund higher inventory levels, deploy capital toward accretive acquisition that adds more critical mass to that flywheel and consider opportunistic share repurchases. While many challenges from COVID grab the headlines, we believe we are creating a company that is built to last and has proven its ability to create value for our stakeholders in a wide range of market environments. Focusing on delivering results for all stakeholders has been a hallmark of Helen of Troy throughout its transformation and we are proud to continue that work. I will now turn the call over to Brian. Brian Grass: Thank you, Julien. Good morning everyone and thank you for joining us. I hope that you're safe and healthy. Our thoughts continue to be with the people who've been directly affected by the COVID-19 pandemic. We want to extend our appreciation for the efforts of first responders, healthcare providers, and essential workers, and for the efforts of our own associates that aren't able to work from home. I'm pleased to say that the rate of infection among our associates has been minimal. Our priority has been and continues to be their well-being during this unprecedented time. The impact of COVID-19 pandemic has significantly accelerated demand for leadership brands, and I'm grateful that Helen of Troy is in the position to continue to provide products that help individuals and families during this difficult time. As Julien highlighted, we delivered an exceptional quarter, reporting more than 20% growth across all three segments and strong operating margin expansion. Our profitability was buoyed by temporary expense reduction and deferral initiatives put in place earlier in the year due to the uncertainty of the pandemic's impact on economic activity. Based on strong performance and a little more visibility with respect to COVID’s impact on our business, we have now reversed many of the expense reduction initiatives, particularly personnel related actions in reactivated several key Phase 2 investments. We remain below normalized levels of marketing spend for several reasons, which I will cover later in my remarks. On the whole, the business is showing sales strength that I have not seen in my 14 years with the company, which combined with an expanding gross profit margin and expense discipline resulted in adjusted diluted EPS growth of 68.3% in the second quarter. Our liquidity was another highlight ending the quarter was 1.1 billion in liquidity including 148.4 million in cash and 955 million available on our $1.25 billion credit facility, and our liquidity has continued to improve into October. We generated 171 million of free cash flow in the first six months of the year, and we increased inventory by almost $100 million and made capital expenditure investments of $15.2 million to better [satisfy the surges] in demand we have seen and help mitigate any potential further COVID-19 disruption on our supply chain. As we noted in today's earnings release, we have deferred our outlook for fiscal 2021 at this time. We expect return to our historical practice of providing an outlook once visibility improves. Now, moving on to a more detailed review of the quarter. Consolidated net sales revenue was 530.9 billion, a 28.2% increase over the prior year. Organic business net sales grew 25.7%, driven by very strong sales growth in all three business segments. As expected, we saw improving trends in the Housewares and beauty segments, and second quarter demand in the health and home segment continued to drive growth consistent with the first quarter. This strength more than offset the adverse impact of COVID-19 related store closures in lower store traffic at certain retail customers during the quarter, which continued to adversely impact net sales, primarily in our Housewares and beauty segments. This includes retailers such as DICK'S, REI, Bed Bath & Beyond, specialty outdoor, specialty kitchen, department stores, Ulta, Sally's, Drybar salons and closeout retailers, where same store net sales were generally down due to either store closures early in the quarter or reductions in foot traffic as consumers continue to adjust their shopping behaviors in discretionary spending. Consolidated sales in the online channel grew approximately 32% year-over-year to comprise approximately 24% of our consolidated net sales in the second quarter. Sales from our leadership brands grew 30.3% in the quarter, which includes 3.2 percentage points of growth from Drybar. While Drybar sales improved sequentially from the first quarter of the fiscal year, its second quarter sales continued to be hindered by Drybar salon and key customer store closers. Organic sales for our Housewares segment increased 20.2%, which included growth for both the OXO and Hydro Flask brands. This reflects higher demand for OXO products as consumers spent more time at home cooking, cleaning, organizing, and pantry loading in response to COVID-19. An increase in online sales for both OXO and Hydro Flask, higher sales in the club channel, growth in international sales, and new product introductions. These factors were partially offset by the COVID-19 related impact of reduced store traffic and store closures at certain retail brick and mortar customers, mostly in the early part of the quarter. Health and home organic business net sales increased 33.1%, due to consumer demand for health care and healthy living products in domestic and international markets in both brick and mortar and online channels, due primarily to COVID-19 in demand driven by severe wildfire activity on the West Coast of the United States. These factors were partially offset by declines in non-strategic categories. Beauty segment net sales grew 34.6% and organic sales increased 23% driven primarily by strong demand for a one-step family of products, expanded distribution, and an increase in international sales. Drybar products contributed net sales revenue of 10.5 million or 12.1% to segment net sales growth. These factors were partially offset by sales decline and the legacy mass market personal care business. The impact of store closures early in the quarter and lower foot traffic at certain retailers and the unfavorable impact of net foreign currency fluctuations of approximately 0.4 million or 0.5%. Consolidated gross profit margin expanded to 43.4%, compared to 43%. The 0.4 percentage point increase is primarily due to a favorable product mix within health and home and the organic beauty business, the favorable impact of the Drybar products acquisition, a favorable channel mix within the Housewares segment, lower direct import sales and lower air freight expense. These factors were partially offset by unfavorable product mix in the Housewares segment and the unfavorable comparative impact of tariff exclusion refunds received in the prior year period. Consolidated SG&A was 24.7% of net sales, compared to 29.8%. The 5.1 percentage point decrease is primarily due to the impact of higher overall sales have an operating leverage in cost reduction initiatives, including temporary personnel, advertising, and travel expense reductions due to the uncertainty of COVID-19. These factors were partially offset by higher performance based annual incentive compensation, higher legal expense, and higher customer chargeback activity. In SG&A ratio, 24.7% is below our historical norm due partially to the surge in revenue, but also due to cost reduction measures in place for a portion of the quarter and lower [marketing expense] due to supply and distribution and capacity constraints in certain parts of the business, which I will discuss later in my remarks. GAAP operating income was 99.3 million or 18.7% of net sales, compared to 54.5 million or 13.2% of net sales in the same period last year. On an adjusted basis, consolidated operating margin was 20.4%, compared to 15.9% in the same period last year. The 4.5 percentage point increase primarily reflects the favorable impact that higher overall sales have on operating leverage, a favorable product mix within health and home in the organic beauty business, a favorable channel mix within Housewares, and cost reduction initiatives, including temporary personnel advertising and travel expense reduction due to the uncertainty of COVID-19. These factors were partially offset by an unfavorable product mix within the Housewares segment, the unfavorable comparative impact of tariff exclusion refunds received in the prior year period, higher performance based incentive compensation, higher legal expense, and higher freight and distribution expense. Housewares adjusted operating margin increased 1.3 percentage points to 23.7%, primarily reflecting the impact that higher overall sales have on operating leverage, a more favorable channel mix in cost reduction initiatives, including temporary personnel advertising and travel expense reductions due to COVID-19. These factors were partially offset by a less favorable product mix; higher performance based incentive compensation expense, higher freight and distribution expense to support strong demand and increased customer chargeback activity. Health and Home adjusted operating margin increased 6.7 percentage points to 17.9%, primarily reflecting the impact that higher overall sales had on operating leverage, more favorable product mix, and cost reduction initiatives due to COVID-19. These factors were partially offset by the unfavorable comparative impact of tariff exclusion refunds received in the prior year period, and higher performance based incentive compensation expense. Beauty adjusted operating margin increased 7.6 percentage points to 19.5%, primarily due to the impact that higher overall sales had on operating leverage, a more favorable product mix, lower air freight expense and cost reduction initiatives due to COVID-19. These factors were partially offset by higher personnel expense related to the acquisition of Drybar products, higher performance based incentive compensation expense, and increased legal expense. Moving on to taxes, income tax expense as a percentage of pre-tax income was 9.6%, compared to income tax expense of 10.3%, primarily due to the benefits recognized from the transition of our Macau entity from offshore to onshore status, partially offset by increases in liabilities related to uncertain tax positions. As you may recall, we currently have an indefinite tax holiday in Macau. The Macau offshore laws and the supplementary regulations that grant tax incentives to approved offshore institutions will be abolished on January 1, 2021. Existing approved offshore institutions such as ours, can continue to operate under the offshore regime until the end of calendar year 2020. Beginning calendar year 2021, our Macau subsidiary will transition to onshore status and become subject to a statutory corporate income tax rate of approximately 12%. As previously disclosed, the impact of this change on our consolidated effective tax rate was subject to the transfer pricing analysis, which was completed in the second quarter. On an annual basis, we expect this change to increase our overall consolidated effective tax rate by 1.5 percentage points to 2 percentage points beginning in fiscal year 2022, which we consider to be a favorable outcome given the extensive to corporate tax rate change. Net income was 87.3 million or $3.43 per diluted share and 25.5 million shares outstanding, compared to 46.1 million or $1.83 per diluted share in the prior year on 25.2 million shares outstanding. Non-GAAP adjusted income grew 69.7% to 95.9 million or $3.77 per diluted share, compared to 56.5 million or $2.24 per diluted share. Now moving on to our financial position for the second quarter of fiscal 2021, compared to the second quarter of fiscal 2020. Accounts receivable turnover was 68.7 days, compared to 68.4 days for the same period last year. Our accounts receivable balance was 402 million compared to 310.4 million in the same period last year. Inventory turnover was 3.3 times for the trailing 12 months ended August 31, 2020, compared to 2.99 times for the prior year period. Inventory was 350.2 million, compared to 370.9 million. Net cash provided by operating activities increased 148.1 million to 186.3 million for the first six months of fiscal 2021. The increase was primarily due to higher net income and higher cash provided by accounts payable and accrued expenses, partially offset by higher cash used for receivables and inventory. The increases in working capital components are in-line with our expectations due to the significant growth to fiscal year and our efforts to mitigate any further potential COVID-19 disruption on our supply chain with higher inventory levels. We expect to further build inventory leading into our peak selling season in the second half of the year. Total short and long-term debt was 300.1 million, compared to 301.2 million. Free cash flow for the first six months of fiscal 2021 increased 141.7 million to 171 million. As of the end of the second quarter our leverage ratio as defined in our debt agreements was 0.9 times compared to 1.2 times at the same time last year. This is the sequential decrease compared to 1.1 times as of the end of the first quarter of this fiscal year. Our net leverage ratio, which nets for cash and cash equivalents with our outstanding debt, was 0.5 times at the end of the quarter. We continue to hold higher than normal levels of cash to protect us against any future exogenous shocks to the credit markets and allow us to fund our targeted inventory levels going into our peak selling seasons and through Chinese New Year without the need to incur further debt. We believe our liquidity and cash flow puts us in a great position to continue navigating the uncertainty of the external environment and take advantage of potential capital allocation opportunities. Now on to business updates. As we look to the remainder of the fiscal year, we are still operating in an extremely dynamic environment. Due to the evolving COVID-19 pandemic and related consumer and business uncertainty, we are not providing an outlook for fiscal 2021 at this time. In addition to the lack of visibility into consumer demand and the uncertain impact of COVID-19 on the retail environment, trends are emerging that may impact our ability to fill some orders on a timely basis, and our ability to make marketing investments within acceptable return, all of which had a significant impact on our ability to forecast within a reasonable range. As previously disclosed, during the first quarter of fiscal 2021, as part of a comprehensive approach to preserve our cash flow and adjusted cost structure to align to lower anticipated revenue, we implemented a number of temporary precautionary measures in response to the uncertainty from COVID-19. Based on stronger than expected performance, we reversed the number of these measures toward the end of the second quarter of fiscal 2021, including a restoration of all wages, salaries, and director compensation to pre COVID-19 levels. In addition, towards the end of the second quarter, we also selectively increased levels of investments in certain marketing activities, new product development, and launches in capital expenditures in support of our Phase 2 transformation strategy. During the remainder of the fiscal year, we are planning to continue to increase our marketing and other growth investments. We continue to see very strong demand trends in many of our product categories. In the second quarter, demand continued to outpace, even recently increased supply capacity with respect to thermometry, air filtration, water filtration, and various products within Housewares, which in some cases is resulting in our stocks. Surges in demand and shifts in shopping patterns related to COVID-19 have strained the U.S. freight network which is resulting in carrier delays. In addition to Houseware sales growth 14.1% and 22.4% in fiscal years 2019 and 2020 respectively, demand has further surged for the OXO brand, which in combination with carrier delays has caused order flow to outpace shipping capacity in one of our distribution centers. In some cases, this was resulting in out of stocks at retail for some OXO items. But we have moved very quickly to bring additional distribution and storage facilities online in support of surging order volume and higher targeted inventory holdings heading into our peak selling season. We believe there could continue to be some level of out of stocks in certain parts of our business. Not only do these trends impact our ability to accurately forecast revenue, they can also limit our ability to make marketing expenditures with an adequate return on investment. In certain categories, where macro trends like COVID-19 are driving demand significantly higher than historical levels, or in situations where supply or distribution is capacity constrained, we believe that driving additional demand through incremental marketing activities could compound potential shipment delays or out of stocks. In these situations, currently planned marketing investments designed to drive short-term demand would not be made. We believe these factors could contribute to a wide variation of outcomes with respect for adjusted diluted EPS for the remainder of the year. Our base plan is to make the majority of the incremental marketing investments that we planned at the beginning of the year, and that we believe are best for the long-term health of our brands. If we are able to execute against your base plan, we would expect adjusted operating margin for the full fiscal year to expand by approximately 0.2 percentage points to 0.4 percentage points, compared to fiscal 2020, which would imply year-over-year compression in the second half of the year. The current demand trends continue and we are not able to execute against our base plan. Adjusted operating margin could expand by as much as 0.8 percentage points to 1.6 percentage points for the full fiscal year, compared to fiscal 2020. As a result, we believe there could be as much as $0.50 to $1 of adjusted diluted EPS variability just for marketing investments that are planned for the second half of the year, but may not be made due to an unacceptable return on investment, capacity constraints, or lack of visibility. This range does not include the additional potential revenue variability from COVID-19. While this year is certainly testing us all, I'm pleased with how our entire organization is rising to the challenge. Our teams are working hard to fulfill customer and consumer orders, while simultaneously executing the key Phase 2 initiatives we have chosen in developing operational plans for a variety of scenarios. We remain disciplined yet opportunistic in our expense and capital investment approach, focusing on maintaining a strong balance sheet to ensure we have the flexibility to pivot our approach as we navigate these uncertain times. Finally, just a few comments regarding the announcement of my intent to retire on November 1, 2021, just over one year from now. As stated in today's earnings release, I put aside my entrepreneurial interests for almost my entire career. And I've now reached a point where I can explore these interests in a financially responsible way, while still being young enough to do it. It is my dream to build something that I can hand over to my son one day. I also want to be more available for my son than I would be if I continued in my current role. I believe I can be successful in different ways in my professional career, but the only way I can be successful as a dad is to be there. My wife has done nothing, but patiently supported, despite the long hours, personal sacrifices, and intrusions on family time that I owe her more. She is a financial analogy. I made a lot of withdrawals from the family account and it is time to start making some deposits. Finally, I've always tried to put the company's interest first, and I believe the company will benefit from the fresh set of eyes, new blood, and a different voice. I'm proud to say that the company has never been stronger financially, operationally, or strategically, and I believe the best is yet to come. I'm also proud that we have developed strong internal CFO succession talent, whom we will continue to groom over the next year. The company also intends to conduct an external search to ensure the best possible succession for Helen of Troy. I want to thank Julien for his friendship, mentorship, and trust. I also want to thank Julien, the Board of Directors, our global leadership team, and the financial organization for allowing me to be a part of this amazing journey. It is a gift to be entrusted with the responsibility of leading a company like Helen of Troy and I’m truly grateful. I look forward to working with Julien to ensure the smoothest possible transition for the company. I also look forward to speaking with many of you over the next year, hopefully in person at some point. And with that, I'd like to turn it back to the operator for questions. Operator: Thank you. [Operator Instructions] Our first question today is coming from Bob Labick of CJS Securities. Please go ahead. Bob Labick: Good morning and congratulations on the personal news, as well as the strong operating performance. Brian Grass: Thanks Bob. Julien Mininberg: Thanks Bob. Great to hear from you. Appreciate it. Bob Labick: Yes, you guys as well, great. No, its super exciting to hear, Julien, that you're extending your contract and staying on, and Brian, obviously, I'll admit a little bit of a surprise announcement, but it sounds like you've thought about it a lot, and it sounds terrific, so congratulations. Brian Grass: Well, thanks. I’m going to miss working with you for sure and, you know, it's not goodbye now, so we have a little bit of time, but I’ve valued our working together over the past, so I will miss that. Bob Labick: Oh! Absolutely. I appreciate it very much as well and I won't say goodbye yet either because we have another year. Maybe before just jumping to the operational results, one more question for you, Brian, if you don't mind. Can you talk about your current, you know, ownership position in Helen of Troy and how that might, you know, change or be impacted, if that's, you know, thought of as part of the, you know, funding of your future pursuits, or, you know, how you're thinking about that? Brian Grass: Sure. So, I have a meaningful position in Helen of Troy and some stock ownership, and, you know, I would expect that the takeaway is – I would expect that to continue through my date of retirement. I do expect to have, you know, some level of sales for diversification purposes and retirement planning purposes. But again, I expect my ownership to remain meaningful throughout my tenure. It's also important to note that per my severance agreement and our retirement plan, I'm eligible for continued vesting of my stock awards. And so, I have a vested interest in Helen of Troy’s success, the succession planning work that we're doing for years after my retirement because I have a vested interest in those stock awards that will vest one, two, three years after the date of my retirement. So I think that the key takeaway is, I have a, you know, very, very meaningful ownership interest in Helen of Troy stock and I would expect that to change in a meaningful way although there could be some sales over time, just again, for diversification in retirement planning. Bob Labick: Okay, got it. It makes a lot of sense. And, as I said, we have another year, so I won't say goodbye. But jumping over to operations or just the business in general, obviously, you guys are a consumer-centric company focusing on innovation, and new products and that's what's been driving your growth for so long. How have the needs, the wants, or the desires of your customers changed from COVID? And how are you changing right now to address these needs, and you know, being able to still get consumer insights in a, you know, different environment? Julien Mininberg: Yes, thanks, Bob. It's a great question. Consumer centric, that's exactly the right word for us. It is our single-minded focus, and frankly our obsession. In the case of COVID-related demand, consumers are doing some interesting things. As indoor season comes along in the Northern Hemisphere, so think schools, universities, best time outside, in general, because of the temperature, we're seeing a considerable surge in things like air purifiers. There's tons of articles in the press, some in the scientific press, lots of recommendations now, even from the CDC, on the subject of indoor transmission, ventilated spaces, droplets, particles, et cetera. So, this is a big deal and it is changing consumer behavior. We're seeing a tremendous surge in air purifier sales. That's only accelerated since Q2, so here we are in almost the middle of Q3 and I can definitely say that that is growing considerably. We're bringing tons more capacity online, as we said in the public remarks. In fact, about 50%, more, you know, purifiers on top of what we’ve already sold and have coming by the end of next month into our production system. And in the case of thermometers, there's a change as well. Here we're seeing people going from this idea of detecting temperature to now screening, and that's happening both on the consumer household side and also in institutions of all kinds. So, thermometers, and you may have seen it yourself. I recently went to an Apple store and the people [indiscernible] online, the first thing they do is check your temperature. Importantly, with no contact thermometers, which has become a big, skew for us. We’re making a lot more of those as well in our production increases. Lastly on consumer behavior, the nesting thing has been a really big deal in Housewares and this is good news for the company as well. We're seeing, for example, younger people, millennials and even younger households in that now discovering sort of joys of home, joy of cooking, tooling up, gadgeting up, and I think everyone on this call probably knows that OXO has a very positive rabbit-like quality, meaning once or two – one or two OXO items make it into the home. Their quality, their excellence, appeal, somewhat experience, what we call the second moment of truth, after you buy it, you use it at second moment, make those rapids multiply considerably within the house and you go back a year or two later, it's kind of like Hydro Flask you'll just see a lot of them scattered around the house. So, that's a couple of examples of consumer habit changes. I'll give you one last one, which is around Drybar. There's quite a lot of Drybar Home Care happening. So, think of women who have more fewer trips to the salon, but nonetheless on Zoom calls and all their other obligations, and that want to look good and Drybar products are just spectacular to that people buying them, especially online. Bob Labick: Okay, great. Appreciate all that color there. And you've talked about, you know, a number of times on the call today, obviously, you're selling products as fast and sometimes, you know, can't even sell as many you're making – as you're selling this as you can make them and you pulled back on marketing to not exacerbate the supply constraints. What is your other areas to spend? Are you shifting your spending patterns? What other projects can you spend on? And can you give us some examples of, you know, what you're doing with that marketing? Obviously, some of the marketing is, you know, flowing through with a lack of marketing [slowing through] the bottom line, but there are other things you can be spending on internally? Julien Mininberg: Yes, a ton. So – and there’ll even be some confusion on this. So, I want to make sure this gets out and I'm really glad you bring it up. Two things I'd like to say, one is, we are spending heavily on the phase two key initiatives and it's not just marketing. And the second is that we are spending on marketing, especially in certain areas. We just don't want to stimulate short-term demand on products where we already have so much natural demand that we can't meet the supply, so that's an ROI thing. If you already had an overwhelming amount of orders and you can't meet every single one of them to spend short-term money to generate more of those orders is not a good return on the investment. In the case of the other areas that we're spending, think of the things that were listed in the call, infrastructure, that's IT, distribution throughput capability, it's also the ability to diversify our supply chain beyond just China, which is something that many people on this call were pounding the table for only a few months ago and we have been doing for some time. We're also spending a fair amount of money on hiring; especially in key areas of the company I think upstream, especially engineering quality, product development. We’re spending on product development in a big way, and in marketing itself, there's things that don't hit the market in the very short-term. So think of content for videos, packaging, new claims, development, testing, new product, testing with consumers, market research, and other areas, as well as mentioned on the call. We're spending money also on the topic of culture, especially now, with new people coming on board. Training them in the work-from-home environment takes a little bit of extra cost because they don't have the natural on-boarding experience. So, plenty of money going out the door and on the subjects of all of it against Phase 2 flywheel generators, and lastly, on the marketing, to be careful not to spend to generate short-term demand if we don't see enough supply. Brian Grass: Hey, Bob, I'd like to add something too. We're taking advantage of this opportunity to spend a lot operationally as well. So, we're expanding our distribution footprint where, you know, improving the quality of our systems and doing a lot of activities around that. I – and I really think the outcome is good either way. I think maybe there's focus on a little bit of compression in the back half, but I think, you know, if we have a little compression, even with that, we still get a very good outcome for the year and we've been able to invest behind our brands. If we aren't able to do the spending, then we're going to get a great tremendous outcome in terms of earnings and I think still be in a very good spot with respect to demand trends and the health of the business and we've made the investment operationally that will support the growth for the future. So, I kind of view the situation we're in as been, you know, no loose. It's just a little bit fluid, and so, when people want very precise financial projections, it's hard to give, but it's not a bad outcome either way. It's either going to be a very strong profit results or it'll be a good profit result with investment behind our brands and investment behind the infrastructure of our business. So, you know, I view it as, you know, can't lose in the situation, it's just a wide range of outcomes that we could have for the full year and we want to be very transparent about that and that's what we're trying to do. Bob Labick: Okay, great. No, that sounds terrific. And then last one, I promise I'll jump back in queue, but, you know, typically, your back-to-school has been pretty big for Hydro Flask. So, I was kind of curious this year is obviously, massively different than any other time. And one, kind of an update on that, how that may have – may or may not be impacting Hydro Flask? And then, I can't help myself so I also want to ask about, you know, potential customization, you know, enhancements to the Hydro Flask opportunity and kind of where that stands? Julien Mininberg: Yes, let's start with Hydro Flask, just tons of opportunity on Hydro Flask where we spent years building that franchise. We're doing a ton more of it right now. We use the word leaning in a couple of times in our comments and we mean it. There's some key brands that we said we are investing heavily in. We also said that short term, there are marketing opportunities. Hydro Flask is very much one of them, in fact, almost on the top of the list. We're spending also, by the way, on volumizer franchise, which is growing rapidly and expanding around the world. We're spending on international. We're spending on those no contact thermomometers, especially in Asia as examples. Now on Hydro Flask, the build-out is a big deal. It's doing extremely well in most of its markets, especially outside the United States right now happens to be on Fire. And on DTC is a huge new driver for Hydro Flask beyond what we've done already. One where we feel we can catch up considerably with what's going on in the market and we're pulling a ton of the investment. Bob Labick: Okay, super. Well, I will jump back in and pass the questions on. Thank you. Julien Mininberg: Thanks. Our pleasure. Operator: Thank you. Our next question is coming from Rupesh Parikh of Oppenheimer. Please go ahead. Rupesh Parikh: Good morning. Thanks for taking my question and also congrats on a nice quarter. So, I guess I wanted to start out with just a question on guidance. So, we look at your commentary, it suggests either we could see [indiscernible] 20 basis points to 40 basis points [indiscernible] spending plans are 80 to 60 basis – 80 basis points to 160 basis points if you can. So least based on my assessment that implies operating margins could be down more than 200 basis points in the back half of the year, is that accurate? And then, is there any way to, I guess, think about, you know what – you know, whether these investments accelerate investments maybe that you would have made in future years and you just pulled them forward to this year? Brian Grass: So, I think it's called the directionally accurate. I mean, I didn't calculate the back half, but I think if you do the math of what we've given you, you can – you get the outcome. So, it's really just math what happens in the back half and that's, you know, really not our focus. Our focus is the outcome for the year and the health of the business going forward and that's what we're striving towards. The quarterly variability, I think, is not worth us spending much time on because, you know, it doesn't matter at the end of the day, how we get there, it just matters, you know, where we get and we want to be careful with the health of the business and we're focused on that. But like I said previously to Bob, either outcome is very positive in our minds. Either we've used the opportunity that we've been given to invest behind the brands and we're in a very strong position going into next year and we have a little bit of compression in the back half of the year, or we don't have the compression. We have the incredible result for the full fiscal year and we're still positioned, we believe, to do well going forward. But we are very conscious and aware of the health of our brands. And so, we want to use every opportunity that we've been given with the demand surge to invest behind our brands. It's just the demand surge has been so great that we have to be a little more selective in terms of our marketing spend because we can't drive demand where we can't fulfill, meet the needs of the demand. And so, it's a very unique situation to be in and a good situation to be in and we're figuring it out and I think we're stewarding the brands and the business, as well as we possibly can given all the volatility. So, I hope that answers your question. I know it's more specific about the precise compression. I think that's something to consider and know as you're doing the math of our projections, but I don't think it should be the takeaway. The takeaway should be we're stewarding the health of our business the best we can in this environment and I think we're in a very good place. Rupesh Parikh: Okay, great. That's helpful thought there. And then, maybe just one follow-up question. So, as we look at the health and home business, you know, obviously, very strong growth in Q2. I was just curious if you could speak to the sell-in versus sell-out, if you saw any re-stock benefit during the quarter as maybe some of your retailers ordered ahead of the key season? Julien Mininberg: Yes, it's mostly sell-in and sell-out. The demand is extremely strong, especially in four leadership brands that make up the vast majority of health and home. So just to be clear, that's Vicks, Braun, Honeywell, and PUR, and people may have the wrong impression. They may think that somehow we don't have supply. It's not true. We have large amounts of supply. We've made them bigger and they're going to get bigger still. What is true is that we have even larger amounts of demand, especially in the air purifiers and the thermometers. And so, what's happening is the sell-ins is – sorry, the inbound is quickly the outbound, and for retailers, what's ordered is quickly sold through. That is leading to some out of stocks and that's why we called it out and you can probably see those in the marketplace. In the case of the replenishment orders, they're constant and we're fulfilling as much of those as we humanly can. There is some allocation just because of the limited supply and as we catch up, there's less and less of that. And then, in terms of the replenishment for the cold and flu season, retailers are properly positioned, I believe for a normal cold and flu season. There is uncertainty and we called it out in our remarks about what that season will be like for the simple reason that COVID is unusual and concurrent. So, we'll see how that goes, but everything is in the right place and the more that we bring in, it all sells through and that's happening for retailers too and they’re replenishing as fast as they can. Rupesh Parikh: Okay, great. Thank you very much for all the color and best of luck for the balance of the year. Oh, sorry. Go on. Brian Grass: Sorry. Let me follow up a little bit on the compression in the second half. I mean, you're pointing out I think that it seems like a big number. I want to point out that in – the profitability in the back half last year was very strong too and we had a very strong demand surge or volume surge, especially in Q4, which was a little bit ahead of our expectations. And so, the profit was also ahead of our expectations, and, you know, we didn't have a spending lined up to go along with that outcome. So, it – hopefully a little bit of color there and you understand that the comparison is important as well and that will factor into the compression, but like I said, I think either way, the outcome is good for the full year, and quite honestly, even in the second half because I think we'll be positioning ourselves well for next year. Julien Mininberg: Yes. It may be time to just get real clear on this compression thing because I think it's coming up a fair amount and it's possible that people are having a concern that is greater than the situation that we're really in. Think of the year as a lumpy one. We were in a situation like everyone else in the world where COVID hit hard in months like March, April, May, and we like others turned off some lights, which is – and cut our spending. We had increases in margin because of that. As the demand surged and we saw that in Q1 and now again in Q2, we had margin expansion that's above normal and not a sustainable regular number. As we look at our Phase 2 investments that we originally envisioned at the beginning of the year, they are bold and they are right and those significant investments are what powered flywheel and is creating the long-term transformation that has generated so much value in this stock. The result now is that the same management team is doing the right thing. We are using the tremendous cash flow of the company that you saw, that $171 million free cash flow in the first half, to drive that engine in the back half. So, if you start the spending in the front half because of the lumpy COVID thing and have opportunities both on infrastructure, as well as in the marketplace, hiring of the other things I mentioned in the list I gave h
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Helen of Troy Limited (NASDAQ:HELE) Q3 Earnings Overview

  • Helen of Troy Limited (NASDAQ:HELE) reported earnings per share (EPS) of $2.17, missing the estimated $2.61.
  • The company generated revenue of approximately $530.7 million, surpassing the estimated $485.9 million.
  • Despite the revenue beat, shares of HELE experienced a 4% decline due to a decrease in quarterly sales and a lowered full-year profit forecast.

Helen of Troy Limited (NASDAQ:HELE) is a company known for its household and beauty products. On January 8, 2025, HELE reported its earnings for the third quarter, which ended in November 2024. The company announced earnings per share (EPS) of $2.17, which fell short of the estimated $2.61. Despite this, HELE generated revenue of approximately $530.7 million, surpassing the estimated $485.9 million.

During the Q3 2025 earnings conference call, key company figures such as Sabrina McKee, Noel Geoffroy, and Brian Grass provided insights into the company's financial performance. Analysts from firms like CJS Securities and UBS participated, highlighting the importance of the event. The call revealed that despite the revenue beat, shares of HELE experienced a 4% decline due to a decrease in quarterly sales and a lowered full-year profit forecast.

HELE's financial performance can be further understood by examining its top- and bottom-line numbers. The company achieved a gross profit of $259.3 million and an operating income of $75.1 million. The cost of revenue was $271.4 million, leading to a net income of $49.6 million. These figures provide a comprehensive view of HELE's business operations during the quarter.

The company's earnings call also addressed the reduction in demand for beauty and wellness items, which contributed to the lowered profit forecast. Despite the challenges, HELE's revenue performance exceeded market expectations, offering a mixed picture of its financial health. 

Helen of Troy Limited (NASDAQ: HELE) Earnings Preview: Key Financial Metrics to Watch

  • Earnings per Share (EPS) is projected at $2.61 for the third-quarter fiscal 2025.
  • The Price-to-Earnings (P/E) ratio stands at 9.47, indicating potential undervaluation.
  • Current Ratio is at 1.77, showcasing Helen of Troy's financial stability.

Helen of Troy Limited (NASDAQ: HELE) is a prominent player in the consumer products industry, specializing in home, outdoor, beauty, and wellness sectors. As the company gears up to release its third-quarter fiscal 2025 earnings on January 8, 2025, investors are keenly observing the anticipated figures. Wall Street projects an earnings per share (EPS) of $2.61 and revenue of approximately $534.2 million.

Beyond these projections, investors should consider key financial metrics to better understand Helen of Troy's performance. The company's price-to-earnings (P/E) ratio is 9.47, which helps gauge how the market values its earnings. A lower P/E ratio can indicate that the stock is undervalued compared to its earnings, potentially making it an attractive investment.

The price-to-sales ratio of 0.70 suggests that the stock is valued at 70 cents for every dollar of sales. This ratio can help investors assess whether the stock is overvalued or undervalued relative to its sales. Additionally, the enterprise value to sales ratio of 1.08 provides insight into the company's total valuation in relation to its sales.

Helen of Troy's enterprise value to operating cash flow ratio stands at 9.51, indicating how many times the operating cash flow can cover the enterprise value. This metric is crucial for understanding the company's ability to generate cash flow relative to its valuation. The earnings yield of 10.56% further highlights the percentage of each dollar invested in the stock that was earned by the company.

The company's debt-to-equity ratio of 0.45 reflects a moderate level of debt compared to equity, suggesting a balanced approach to financing. Lastly, the current ratio of 1.77 indicates Helen of Troy's capability to cover its short-term liabilities with its short-term assets, showcasing its financial stability.

Helen of Troy Beats Q2 Earnings, Stock Jumps 17%

Helen of Troy (NASDAQ:HELE) reported stronger-than-expected second-quarter earnings and maintained its full-year guidance, boosting shares by more than 17% intra-day today. The company posted an adjusted EPS of $1.21, surpassing Street expectations of $1.04, and revenue of $474.2 million, exceeding the forecasted $458.86 million.

CEO Noel M. Geoffroy expressed satisfaction with the results, noting that the company is reaffirming its annual projections for net sales, adjusted EPS, and adjusted EBITDA. While net sales dipped by 3.5% year-over-year to $474.2 million due to softer performance in the Beauty & Wellness segment, the Home & Outdoor segment achieved a 0.8% growth.

The gross profit margin fell to 45.6% from 46.7% last year, impacted by an unfavorable product mix and increased inventory-related costs. Helen of Troy maintained its fiscal 2025 guidance, projecting net sales between $1.885 billion and $1.935 billion and adjusted EPS in the range of $7.00 to $7.50, aligning with Street projections.

Helen of Troy Limited Earnings Report Preview

  • Earnings per Share (EPS) is anticipated to be $1.59.
  • Projected revenues are expected to be around $446.22 million.
  • The stock has experienced a downturn, with the current price at $90, marking a decrease of approximately -2.95%.

On Tuesday, July 9, 2024, Helen of Troy Limited (NASDAQ:HELE), a prominent player in the consumer goods sector, is poised to unveil its earnings report for the quarter before the market opens. Wall Street's anticipation is set on an earnings per share (EPS) of 1.59, with projected revenues rounding to approximately $446.22 million. This event is not just a routine disclosure but a pivotal moment for HELE, as it offers a glimpse into the company's financial health and operational success. Helen of Troy Limited is known for its diverse portfolio, including home, outdoor, beauty, and wellness products, catering to a broad consumer base.

The announcement of the earnings release is coupled with a scheduled conference call to discuss the results in detail, providing investors and stakeholders with a deeper dive into the company's performance and strategic direction. This engagement is crucial for maintaining transparency and fostering investor confidence, especially in a competitive market where Helen of Troy competes with other giants in the consumer goods industry.

HELE's stock performance leading up to the earnings report shows a slight downturn, with a current price of $90, marking a decrease of $2.74 or approximately -2.95%. This fluctuation in stock price, ranging from a low of $88.72 to a high of $92.74 on the day, reflects the market's anticipation and speculative reactions to the upcoming financial disclosures. Over the past year, the stock has experienced significant volatility, with prices swinging from a low of $87.5 to a high of $143.68, indicating the dynamic nature of the market and the various factors influencing investor sentiment.

With a market capitalization of about $2.05 billion and a trading volume of 392,638 shares on the NASDAQ exchange, Helen of Troy Limited stands as a significant entity in its sector. The upcoming earnings report and conference call are not just routine financial updates but are critical for assessing the company's market position, operational efficiency, and future growth prospects. Investors and market watchers will be keenly observing these disclosures to gauge the company's performance and strategic initiatives moving forward.

Helen of Troy Beats Q2 Results, But Shares Drop 7% on Weak Guidance

Helen of Troy (NASDAQ:HELE) announced Q2 earnings per share (EPS) of $1.74, surpassing the Street estimate of $1.64. The company reported revenue of $491.6 million for the quarter, higher than the Street estimate of $484.79 million. However, the stock experienced a more than 7% intra-day decline due to disappointing guidance.

Julien Mininberg, Chief Executive Officer, expressed satisfaction with the quarter's results, highlighting that they achieved net sales and adjusted EPS at the upper end of their expectations. The company met its revenue expectations for most of its Leadership Brands, and international performance was notably strong. Helen of Troy also focused on supporting significant new product launches, substantially improving gross margin, and returning value to shareholders through share repurchases.

In terms of guidance, Helen of Troy anticipates fiscal 2024 EPS in the range of $8.50 to $9.00, compared to the Street estimate of $8.91. The company expects 2024 revenue to fall between $1.965 billion and $2.015 billion, compared to the Street estimate of $2.003 billion.

Helen of Troy Beats Q2 Results, But Shares Drop 7% on Weak Guidance

Helen of Troy (NASDAQ:HELE) announced Q2 earnings per share (EPS) of $1.74, surpassing the Street estimate of $1.64. The company reported revenue of $491.6 million for the quarter, higher than the Street estimate of $484.79 million. However, the stock experienced a more than 7% intra-day decline due to disappointing guidance.

Julien Mininberg, Chief Executive Officer, expressed satisfaction with the quarter's results, highlighting that they achieved net sales and adjusted EPS at the upper end of their expectations. The company met its revenue expectations for most of its Leadership Brands, and international performance was notably strong. Helen of Troy also focused on supporting significant new product launches, substantially improving gross margin, and returning value to shareholders through share repurchases.

In terms of guidance, Helen of Troy anticipates fiscal 2024 EPS in the range of $8.50 to $9.00, compared to the Street estimate of $8.91. The company expects 2024 revenue to fall between $1.965 billion and $2.015 billion, compared to the Street estimate of $2.003 billion.

Helen of Troy Stock Surges 18% Following Q1 Beat

Helen of Troy (NASDAQ:HELE) shares jumped more than 18% on Monday after the company reported Q1 earnings results, with EPS of $1.94 coming in better than the Street estimate of $1.68. Revenue was $474.7 million, beating the Street estimate of $465.36 million.

The company provided its full 2024 year guidance, expecting EPS in the range of $8.50-$9.00, compared to the Street estimate of $8.49, and revenue in the range of $1.965-$2.015 billion, compared to the Street estimate of $2 billion.

CEO Julien Mininberg expressed satisfaction with the quarter's performance, stating that it surpassed their initial projections. This accomplishment is especially noteworthy considering the persistent challenges faced by certain product categories due to reduced consumer demand and changing purchasing behaviors.

The company has been making notable strides in its previously announced restructuring endeavor, which involved a reduction of 10% in its workforce. This action was taken in response to the company navigating through a demanding macroeconomic climate.