Helen of Troy Limited (HELE) on Q4 2021 Results - Earnings Call Transcript

Operator: Greetings. Welcome to the Helen of Troy Limited Fourth Quarter Fiscal 2021 Earnings Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Jack Jancin, Senior Vice President, Corporate Business Development. Mr. Jancin, you may begin. Jack Jancin: Thank you, operator. Good morning, everyone. And welcome to Helen of Troy's fourth quarter and fiscal year 2021 earnings conference call. The agenda for the call this morning is as follows, I'll begin with a brief discussion of forward-looking statements. Mr. Julien Mininberg, the company's CEO will comment on our business performance and key accomplishments, and then provide some perspective as we begin the new fiscal year. Then Mr. Brian Grass, the company's CFO will review the financials in more detail and comment about the current trends and expectations for the upcoming fiscal year. Following this, we will open the call to take your questions. Julien Mininberg: Thanks, Jack. Good morning, everyone. And thank you for joining us. Today, we reported a great fourth quarter completing an extraordinary performance in fiscal year 2021. Across nearly any key measure fiscal '21 was the strongest in our 53-year history and an outstanding second year of our Phase II transformation plan. We broke records operationally, financially and on the health of our brands, driving the company past the $2 billion sales milestone, delivering outstanding operating cash flow, further expanding operating margin and growing EPS. Now two years into Phase II, revenue has grown over 34% and adjusted EPS by more than 44%. In fiscal '21, we grew net sales by 23% led by our eight leadership brands, which collectively grew over 25% and accounted for over 81% of sales. Our digital initiatives continue to produce excellent results with online sales up approximately 32% for the year to represent approximately 26% of total sales. Our focus on international continued to bear fruit in fiscal '21 with even faster sales growth than the company average. We delivered adjusted diluted EPS growth of over 25% for the year, which is a meaningful acceleration from the excellent growth in fiscal '20 and our fifth consecutive year posting double-digit adjusted EPS growth. Brian Grass: Thank you, Julien. Good morning, everyone, and thank you for joining us. Reflecting on fiscal '21, it was a remarkable year. The challenges and adversity unlike I've ever seen. We faced a dynamic and uncertain environment and adapted quickly and decisively to navigate crisis and help protect our people, our business, our shareholders and our communities. In the first half of the year, we made choiceful and flexible adjustments to our cost structure while continuing to feed new product development and lean into opportunities to drive healthy and sustainable long-term demand. Just as the pandemic was beginning, we upsized our revolving credit facility on better terms and we also increased our cash position to maximize our financial flexibility in a volatile environment. As we moved into the second half of the year, our strong results and diversified portfolio allowed us to lean back into all parts of our flywheel, including key initiatives for Phase II of our transformation. Although our investment spending was heavily concentrated in the second half of the year, we were nevertheless able to increase our full year growth investments by 40% year-over-year, while still expanding adjusted operating margin. We also deployed over $300 million in capital as we invested in proprietary manufacturing equipment and direct-to-consumer capabilities, further strengthened our brand portfolio and profitability with the onetime payment of $72.5 million for the use of the Revlon trademark royalty-free for the next 100 years and repurchased over $200 million of our common stock. For the full year, we reported exceptional results with net sales growth of 22.9%, adjusted diluted EPS growth of 25.3% and operating cash flow growth of 15.8%. We were able to grow cash flow while increasing our inventory position by $225 million to meet strong demand, mitigate supply chain disruption and help us delay the impact of rising commodity and freight costs. Even with the significant capital deployment and working capital investments, we enter fiscal '22 with no leverage and significant dry powder for further acquisitions, which we have continued to aggressively pursue. We became an even better, stronger and more nimble company who rose to the challenges of fiscal '21. I also believe we found a sweet spot in our growth algorithm of delivering strong results this year while reinvesting overperformance back into our businesses. Our success in fueling the flywheel under such extraordinary circumstances over the past year has only increased my confidence in the company's future, and I could be proud of our organization and culture. Now I'd like to discuss the fourth quarter results and year-end financial position before discussing fiscal '22. We delivered consolidated net sales growth of 15.1% to $509.4 million and organic business growth of 12.2%. We achieved strong growth despite the impact of winter storm, Uri, in late February. The storm delayed in backlog freight carriers across the country and prevented us from shipping approximately $15 million of orders from our Northern Mississippi distribution centers before the end of the quarter. This adversely impacted our fourth quarter consolidated revenue growth by 3.4% in each of the segments by roughly similar dollar amounts. The delayed shipments will be a benefit to sales growth in the first quarter of fiscal '22. Health & Home led the way in the fourth quarter with 23% sales growth even as we began to lap higher demand driven by the beginning of the global pandemic and above-average pediatric fever in the same period last year. Housewares continued its consistent growth trend with 12.1% in the fourth quarter, on top of 15% growth in the same period last year, despite significantly lower store traffic at key customers such as Bed Bath & beyond, DICK's Sporting Goods and REI, among others. Beauty's growth decelerated compared to the first three quarters of the year due to the impact of the storm-related shipping delays and a more difficult comparison to growth of 23.1% in the fourth quarter of last year. Drybar results for the eight-week period prior to the first anniversary of the acquisition contributed $10.4 million to sales growth and is reported in net sales revenue from acquisition. Drybar revenue for the remaining five-week period of the quarter is reported in organic business. Our Beauty segment continues to see strong overall demand across the brand portfolio despite soft store traffic at key customers in the professional and prestige channels. We remain encouraged by how well Beauty is done during the pandemic and are excited about its further growth opportunities as the world reopens. It drove meaningful gross profit margin expansion of 1.7 percentage points as we continue to benefit from favorable product mix within Organic Beauty, Health & Home and Drybar. These factors helped us offset a less favorable product mix in Housewares and higher inbound freight expense. Our SG&A ratio increased 4.3 percentage points to 38.7% as we continue to catch up on human capital spending, make planned growth investments deferred from the first half of the year and make incremental strategic investments originally planned for fiscal '22 or later. This contributed to a year-over-year increase in growth investments of over 80% in the fourth quarter, largely in line with our expectations. We chose to make selective long-term growth and infrastructure investments that we believe have set us up for success in fiscal '22 and beyond, while also taking advantage of short-term demand creation opportunities. Our SG&A ratio was also adversely impacted by higher outbound freight and distribution expense, higher incentive compensation expense and higher legal, patent defense and other professional fees. GAAP operating income was $24.5 million or 4.8% of net sales compared to an operating loss of $2.7 million or 0.6% of net sales in the same period last year. On an adjusted basis, consolidated operating margin was 8.4% compared to 12.2% in the same period last year. The 3.8 percentage point decrease in adjusted operating margin was driven by the increase in growth investments, particularly in the Health & Home segment, higher freight and distribution expense and higher incentive compensation expense, partially offset by operating leverage and gross profit margin expansion. Moving on to taxes. Income tax benefit as a percentage of income before tax was 2.7% compared to income tax benefit as a percentage of loss before tax of 48.1%. The year-over-year change was primarily due to the comparative impacts of tax benefits recognized on impairment charges recorded in both periods. Net income was $22.2 million or $0.90 per diluted share compared to a net model of $3.2 million or $0.13 per diluted share in the prior year. The non-GAAP adjusted income decreased 19% to $38.8 million or $1.57 per diluted share. This includes an estimated adverse impact from winter storm, Uri, of approximately $0.20 per share. Now moving on to our financial position and liquidity. We grew operating cash flow by 15.8% to $314.1 million while increasing inventory by $225 million year-over-year. As mentioned earlier in my remarks, inventory build was largely a strategic choice to meet strong demand, mitigate continued supply chain disruption, delay the impact of current and expected future commodity and freight cost increases and help reduce our exposure to the potential inflationary cycle as we work on further cost mitigation efforts and finalize our pricing strategies. Total short and long-term debt was $343.6 million compared to $339.3 million. This was a sequential decrease from $440.4 million at the end of the third quarter despite the cash outflow of $72.5 million for the Revlon license, reflecting strong cash flow in the quarter and our decision to hold less safety net cash. Our leverage ratio, as defined in our debt agreements, was one times compared to 1.2 times at the same time last year and 1.3 times at the end of the third quarter. Our net leverage ratio, which net for cash and cash equivalents with our outstanding debt, was 0.9 times at the end of the fourth quarter compared to 0.8 times at the end of the third quarter, largely due to the cash outflow for the Revlon license. Fiscal '21 was an extraordinary year, in which we grew revenue just under 23% and increased our growth investments by 40%, while expanding adjusted operating margin and growing adjusted EPS by over 25%. This strength allowed us to accelerate investments into fiscal '21 that would have otherwise occurred in fiscal '22 or later, giving us the momentum of that spend behind the business we remain committed to our long-term growth targets with average annual organic net sales growth of 2.5% to 3.5%. And average annual adjusted EPS growth of at least 8% over the remainder of Phase II. Looking to fiscal '22 specifically, as we noted in today's earnings release, we are deferring our formal outlook for the fiscal year due to high levels of uncertainties surrounding the COVID-19 pandemic and presumed recovery, as well as ongoing disruption in global supply chains and volatility in the cost and availability of commodity, freight and other resources. We expect to return to our historic practice of providing an annual outlook once there is less variability. I will, however, make some broad comments about current trends and expectations for the year. Demand remains strong in several of our key categories, especially within the Housewares and Beauty segments. We do expect demand to moderate in several Health & Home categories as we continue to lap the extraordinary growth of 30% in fiscal '21. We expect categories that were adversely impacted by stay-at-home mandates and retail store closures to benefit from a gradual reopening of schools and communities as vaccination rates increase. Anticipating the timing and pace of recovery is challenging, given the uneven rate of vaccinations, uncertainty regarding vaccine's duration and effectiveness and further outbreaks and variants across the world. Adding to this uncertainty, our global supply chain disruptions and industry-wide volatility and the cost and availability of commodities, processors and freight. The Chinese RMB has also appreciated its near five-year highs, which increases the U.S. dollar cost of labor and raw materials to our suppliers. Surges in demand for certain products and shifts in shopping patterns related to COVID-19 as well as other factors restrain the global freight network, resulting in higher cost, less capacity and longer lead times. More recently, elevated demand for Chinese imports has caused shipment receiving and unloading backlogs in many US ports that have been unable to keep pace with unprecedented inbound container volume. This situation has been further compounded by COVID-19 illness and protocols at any port locations. Due to the backlog and increasing trade imbalance with China, many shifting containers are not being shipped back to China or being shipped back empty, which impacts both availability and cost. As a result, the market cost of inbound freight has increased several fold compared to calendar year 2020 averages. Although we have secured contracts at below current market rates, it is uncertain how much we will be able to leverage our contracted rates due to supply constraints. All of this has an impact on our ability to forecast our costs and could impact our ability to meet demand if it worsens. In order to adjust for the volatile and uncertain environment, the company has implemented a number of mitigation and cost reduction measures that will remain in place until there is greater certainty and less variability. You've likely seen other consumer companies disclose their intentions to increase prices recently and inflation-related concerns are debated daily in the market. While we have not yet made all our pricing decisions, price increases are being considered along with a variety of cost mitigation and reduction strategies. We believe we are in a good position to navigate the uncertainty and volatility relative to the broader consumer peer set with a healthy inventory position and the momentum from investment spending in fiscal '21 that does not need to occur in fiscal '22. We have a lot of flexibility to make spending choices, put our balance sheet to work and take pricing action as we navigate the year. Our goal is to strike the right balance in our earnings growth formula as we've done for the last several years. Netting down the impact of somewhat unusual and lumpy revenue and spending patterns in fiscal '21 against our expectations for fiscal '22, we would expect to see easier adjusted EPS comparisons in the first and fourth quarters with more difficult comparisons in the second and third quarters. We continue to believe that adjusted EPS growth is achievable for the full fiscal '22, but variability from the many moving parts in the macro environment and its impact on the range of potential outcomes, as well as our choices during the year is keeping us from providing a more formal outlook at this time. We expect our tax rate to be in the range of 11% to 12%, which incorporates the previously disclosed adverse impact of 1.5 to two percentage points due to changes in tax law impacting our Macau sourcing on operation. Additionally, although the tax plan outlined by the Biden administration does not have enough detail to fully assess, the broad strokes of the plan are largely as we expected, and I will make some comments based on our initial interpretations and areas of uncertainty. Although there is a proposed increase to the US corporate tax rate, we are less impacted by these changes due to our lower amount of income subject to tax in the US, which is generally 20% to 25% of our worldwide income before tax. We do not expect Biden's plan to impose a 21% minimum tax on US company's foreign income to have a meaningful impact on our consolidated tax expense because many of our foreign subsidiaries are not directly or indirectly owned by US tariff and are not subject to US taxation. Although Treasury Secretary, Janet Yellen's remarks for a global minimum corporate tax rate signal support of Pillar two of the OECD's ongoing work to implement a global minimum tax, it is too early to assess the impact that the Biden plan will have on the OECD's efforts. We know OECD might successfully implement a global minimum tax or what that tax rate might be. We do not expect any proposed changes to global intangible low tax income, often referred to as GILTI, to have a meaningful impact on our consolidated tax expense as many of our foreign subsidiaries are not subject to GILTI or the US taxation. At this stage, it is still unclear what laws will be passed and in what form as well as when they will take effect, but nevertheless, we are not expecting a meaningful impact from legislation changes in fiscal '22. We will continue to assess the impact as proposed legislation is considered and keep you updated. We are planning for capital asset expenditures of between $100 million to $125 million, which includes construction and equipment expenditures related to a new two million square foot distribution facility with state-of-the-art automation and direct-to-consumer fulfillment capabilities. Finally, an update on the process to divest our global mass market Personal Care business. We entered into exclusive negotiations with the selected bidder at the end of February and have largely agreed to the broader terms. We are now working through the detailed negotiation of the various agreements and complexities needed to complete the transaction. We hope to have more to announce very soon. In closing, we are proud of our accomplishments in fiscal '21, which showcase the benefits of our all-weather portfolio, our strong balance sheet and our scalable operating platform, all supported by an extraordinary team of associates. We look forward to building upon our unique platform as we leverage the more lasting trends that emerge from COVID-19 and the beneficial trends of a return to normal to help drive our long-term growth algorithm and deliver continued value for our consumers, associates, customers, communities and shareholders during Phase two of our transformation. And with that, I'd like to turn it back to the operator for questions. Operator: Thank you. Our first question is from Rupesh Parikh with Oppenheimer & Company. Please proceed with your question. Rupesh Parikh: Good morning. Thanks for taking my question. So I guess, but first here, I want to start with - start out with this Health & Home. So the margins were much weaker than we expected. So I was hoping you can provide some more color there? And just any way to think about the right sustainable level of margins, I guess, going forward for that segment? Brian Grass: Yes, this is Brian. I'm not sure - we try to be as clear as we could when we talked about margins in the fourth quarter. And we specifically called out that Health & Home would be the most compressed. So maybe it's the extent of the compression that you're referring to, but I think in our prior comments, we pointed to this. And as we - as I said in my prepared remarks, our spending was largely in line with expectations. So I would say there's really not a surprise there from our perspective. It was all intentional. And we have a lot of things we were trying to accomplish in terms of long-term brand awareness and making investments in assets that we could use in the long term. I'll also point out that there were other margin compression factors in that segment such as higher incentive compensation expense and industry-wide increases in freight expense. So there's several moving parts there, but I would say most - all of them were in line with our expectations. And it's just a quarterly thing that you see in the fourth quarter. And long term, we believe Health & Home is more than sustainable. They should be flat to up next year. But there's, again, a lot of moving parts next year with respect to potential cost inflation. And then how do we respond to that cost inflation via price increases or cost mitigation efforts. So Health & Home's margins are clearly sustainable, and this is just quarterly compression. Rupesh Parikh: Okay. Great. That's actually very helpful. And then I guess, maybe a question for Julien. So your core Beauty growth did saw sequentially. Obviously, Q3 was an amazing performance. Just any more color there in terms of what drove that moderation sequentially within the Beauty segment? Brian Grass: Again, this was the choice making on our part to set ourselves up for success. And we, again, tried to point to it in our previous remarks that we were going to take advantage of opportunities to spend into the strength of fiscal '21 to set us up for FY '22. They also have some of the other margin compression factors such as higher incentive compensation expense and higher freight expense impacting their margins. Again, we've implemented cost mitigation strategies and initiatives to help offset the higher costs, and we're exploring price increases for next year. So we've got a lot of levers we can pull. And we're sizing all of those up, some of them are in place and some of them will be acted on shortly. Julien Mininberg: Yes. Rupesh, let me build a little bit there. The specific answer to your question is that the base grew 23% year over - a year ago, so growing over that base organically means that we're anniversarying a 23% increase. I know pretty much everyone on the call is having a question of, so can Helen of Troy anniversary 23% growth on a total company basis in fiscal '22? You look at this test on Beauty and the answer turns out to be 6% for the fourth quarter. If you look at the specific base in the fourth quarter of a year ago, what you'll see is that the volumizer franchise started to grow very rapidly in that quarter. And then you look at this quarter and see it continuing to grow on top of that, I think it speaks very loudly. And remember, in the last year quarter comparative period, there was no or extremely little COVID. In this year's fourth quarter, there was plenty of COVID. So think of all the reduced store traffic, all the women not traveling, social events, office, et cetera. So to put growth on top of that speed in a meaningfully different environment, I speak - it speaks to the strength of the volumizer franchise, not its deceleration. And then if you talk about market share, you've heard quite a lot in my remarks on the subject of market share, we grew mightily during fiscal '21, including in the fourth quarter. And if you put the last comment on that is storm Uri, we had a hand tied behind our back in the last eight days or so or middle of eight days of February because of the storm, and we grew right over that, too. So I'll defend that one left and right. Brian Grass: Rupesh, sorry, I misunderstood the question that it was on margins, not revenue - with Julien. I agree with everything Julien said, sorry for the confusion. Rupesh Parikh: That's okay. And one last quick one, just since we've gotten a lot of questions on this. So inventory did increase pretty significantly. And you guys did telegraph that in the prior quarter's expected increase. So I've been getting questions in terms of as we look at the inventory increase, any color you can share in terms of what categories drove that increase? And then what would you guys consider? What's like the excess amount of inventory you have versus what you'd normally like to keep if you didn't have all these risk out there related to COVID? Julien Mininberg: Yes. Let me start on this one. We generally target three to four turns of inventory a year. So if you take the size of the company and do the math of that, you'll get the answer to what is - what starts to constitute excess. And in the subject of turns, watch out a little bit for seasonality, that there's some parts of the year when we sell quite a bit more stuff than in other parts of the year, and some of that is seasonable by category. So it matters a lot which category and which time a year. On the topic of adding more inventory, it was a strategic choice. We were also a bit lucky, frankly, that, that choice happened right at a time when we very quickly realized that the supply constraints were getting tight. So the strategic choice part was we were too lean on inventory for much of fiscal '21 as we were selling through much faster than we were able to replenish. And it made us have more out of stocks than we would like, certainly, than our customers would like. It's not good for the shelf. It's not good for giving competitors too much opportunity. It's not good for market share. All these things are bad about not having enough inventory. We caught up during the course of fiscal '21. And then at the end of fiscal '21, made a strategic choice to, a, bring in more inventory on certain categories such as the ones in Health & Home where tariff exclusions were set to expire at the end of December 31, 2021, and we wanted to bring in more product ahead of those tariff exclusions, very good for cost of goods for obvious reasons. Good for margins. And then in the case of the other categories more than catching up and being ready. You asked about volumizers in Q1 of the year ago period, we had very good inventory. We weren't able to meet a lot of the very big surge in demand. We're no longer in that situation. So you can see that it helps. And then the luckier part was that the timing of that was just before some of the heavy supply chain disruptions were becoming big and as those emerge, we were not shy during Q4 to amp up our inventory even further than we were planning to because we knew that the disruptions were starting to emerge. So there is some perspective on inventory. In terms of the amount of inventory we have, I'd say it's a strategic advantage at this point. A lot of companies are hit by the supply chain constraints, but not as many of them are coming into their fiscal year with the improved inventory situation I just described. So to have that kind of buffer in this environment, thank goodness, would be my comment. Brian Grass: Yes. Rupesh, I agree with everything Julien said, and especially the last part. I don't think we have any real excess inventory and no concerns about the health of the inventory at all. In this environment, I think we have the right level of inventory. But yet, I do think we can come down and operate more efficiently in a more stable ready, steady state environment. So I think we're perfectly positioned and no concerns on inventory. In fact, I agree the Julien that it's a strength. Rupesh Parikh: Okay, great. Thank you for all the color. Very helpful. Operator: Thank you. Our next question is from Bob Labick with CJS Securities. Please limit to one question and return to the queue for any follow up question. Bob, please proceed with your question. Bob Labick: Thank you. Good morning and congratulations on excellent operations and execution and obviously a very difficult environment. Julien Mininberg: Thank you. Bob Labick: How are you? Julien Mininberg: Healthy, thanks. Bob Labick: Good. Absolutely, yeah. I wanted to start with one of the comments Brian kind of made at the end and ended there with a new two million square foot distribution center for direct-to-consumer, et cetera, and some capital investment behind it. So maybe you could talk a little more about that. How long will this take to build out? And what are the benefits that you expect to get when it's done? Which brands will be in it? Just how should we think about this expanded distribution center and capacity? Brian Grass: Well, it's being built and designed specifically for the OXO business, both Housewares and - sorry, both Hydro Flask and OXO. And as we said, we'll have state-of-the-art automation and direct-to-consumer capabilities. So it's very exciting for us. It allows us to really kind of expand our distribution footprint and it solves distribution needs for the Housewares business, but also for the other businesses and some of them are combined in the same distribution centers as Housewares currently. And really allows us to tailor each distribution center for each business segment's needs. And so we're very excited about it. It's been delayed. The initial steps of it have been a little bit delayed versus our original expectations. But it should be about 18 months when we're operating out of facility. And the facility also allows us to put in a lot of new software and enhancements and technology and get all that running smoothly and then be able to roll that out to the rest of the organization as well. So we're very excited about it and looking forward to getting it going. Julien Mininberg: While the facility is dedicated to Housewares, the implication of moving Housewares out of one of our other facilities has very positive implications on the ability to reconfigure those for the larger businesses that we have and to reoptimize those older facilities to pick up some pretty significant efficiency gains that have been constrained by us being a bit too crammed in and having to - call it, dumb down the best possible configurations to accommodate the different kinds of business. So think of OXO specifically with a big conveyor belt that is designed to pick, pack and ship highly customized orders. Think of the big machines that we've described in the past, like fast was one and furious was the other to handle the greatly increased number of DTC orders that we now fulfill on an automated basis and then think of the ability to handle seasonality. So it affects the whole footprint in an efficient way. And the last point is, we're just bigger with this company. As I've mentioned in my prepared remarks, it's 40% bigger than it was four years ago. And at a certain point when you're still living in a three-bedroom house, but you got four more kids, you need another bedroom. Bob Labick: Got it. Great. And then just following up on that. I think even with the spin, the balance sheet will be approaching net cash position by the end of next year if you don't do something else. So could you talk about - Brian mentioned M&A, uses of capital because you're getting - you have too much cash. So how are you thinking about that? Julien Mininberg: Yes. Yes. High quality problem. Helen of Troy is a cash flow machine. We're super focused on it and proud of it. And as I said in my prepared remarks, we're not shy about putting it to work in the flywheel. So to be able to do deals like we talked about, whether it was the Revlon deal or the share buyback last year. Just as an example, within the last 12 months of Drybar, only 14 months ago, and that's more than $0.5 billion worth of stuff. And it's all that stuff is off the book - sorry, off the debt rolls already. So that's cash generation right there. In terms of what to do with it, and if we finish the sale on Personal Care, which is our expectation, as we mentioned in our prepared remarks, then more cash there. So the intention is to put it to work, and our capital deployment strategy couldn't be clear. Number one is M&A, we're on the hunt. We see some good prospects and we'd like to add more pearls to our string. There's even a tuck-in or two along the way that could be right for us. So put it into making our machines have a little bit more mass to it and gathering the momentum of the flywheel. The second use can be opportunistic buyback, which we've done from time to time. And then even from time to time, we analyze the benefits of the dividend. We've done that more than once over the years. And so far, we've come to the conclusion to build down the capital strategy that we're in. So lots of flexibility, and we're keenly aware that our balance sheet is air tight and looking for the right use of that cash in a responsible way. Brian Grass: Bob, I'd just add that we can't give you specifics, but we've got three attractive acquisition targets that we're taking a look at various sizes. So we're excited about that, and we'll see how that plays out. Bob Labick: Super. Thank you, so much. Brian Grass: Thanks. Operator: Thank you. Our next question is from Steve Marotta with CL King. Please proceed with your question. Steve Marotta: Good morning, Julien and Brian, and Jack. I have one very quick question and then one a little bit more in depth. Based on commentary regarding March and April, it sounds like quarter-to-date sales are positive, is that accurate? Julien Mininberg: Yes. Yes, we had a very strong March, and we're very pleased with our situation in the beginning of the year. People might get the impression of that's because of the Uri revenue that spilled from February into March. That just is gravy on top. So we just had a good margin. And Uri actually ended up helping March further. Brian talked about that $0.20 of bottom line impact in February that would have been in the results that we just reported today. So we did report $11.65. That $0.20 that is not included in that number is at on top the mark. And then April, we're at the end of the month, and we like very much where we are on the sales upfront. We're right on track where we expect it to be. The balance of the portfolio is working once again in our favor, so we like this. And then we'll see how the rest of the quarter plays out, which we could say, great, now we can see the whole year. But there's just too much variability to just say, well, good eight weeks in, let's give a rock-solid guidance. Steve Marotta: Understandable and helpful. Julien, maybe you can comment a little bit on institutional sales, the opportunities there in the more obvious brands, maybe some opportunities and less obvious brands and the potential impact in the current fiscal year? Julien Mininberg: Yes. I'm glad you asked about this. People asked about it a lot last year because I think they were wondering more about all those hotels and airlines and stores and things that wanted to check people's temperature or have an air purifier. I think what's really happened here is there is a new normal in a lot of institutions. Think of schools, universities and secondary schools, where I don't think people would dream, especially these days, of not having an air purifier available for their students or their teachers. Think of hotels where humidifiers, air purifiers, lot of purifiers and thermometers. Not this stuff was secondary equipment and not top of mind. Like the post 9/11 era, where there's just been 20 years of heightened awareness of security and all the products that go with the ability to provide security. So think of cameras and surveillance and things like this. This is a new normal. So we think the institutional market is sticky and sticky beyond COVID. We've now hired in this area. We've had some success. We have prospects in our fiscal '22 budget. And we like it during the tale of COVID, during the whole reopening period. It's a good reopening play because if you want to reopen, you got to do it safe. And then post-COVID, the stickiness that I'm trying to suggest, we think is real and that's what the institutional customers are telling us. We're also working on institutional products that are specific just for the institutional market. So think of connected devices and certain types of filter change indicators that are wired to a central system, more Internet of Things, these things that are - that they fear that may not be relevant for a home environment but are relevant for an institutional environment. So we like it. And as for which categories, there's the obvious ones, like the ones I mentioned but it's possible that the institutional markets, like the security comment are just a little more woken up on the everyday essentiality of these types of categories as opposed to the - my customers won't come back unless I do more of this right now because COVID I mean all everybody talks about. Steve Marotta: Terrifically helpful. Thank you. I'll take the balance of my questions offline. Operator: Thank you. Our final question is from Linda Bolton-Weiser with D.A. Davidson. Please proceed with your question. Linda Bolton-Weiser: Hi. My questions are on the Beauty segment. I was just wondering, it sounds like you maybe feel like Beauty Organic sales can grow are you seeing - do you have plans for like another major innovation And then on the Drybar side of it, obviously, that business will benefit as we - as the everything reopens. Are you able to do any work yet on expanding the Drybar distribution for the products? Thanks. Julien Mininberg: Yes. Hi, Linda, thanks for the questions. So Beauty grew despite COVID, not because of it. So there's just good prospects going on the other side of this. And even right now, you heard my remarks to Rupesh about the strength of the fourth quarter, despite the 6% year-over-year growth. And so we're in a good situation. Innovation has been the core of Beauty. It's turned around over the last couple of years. For those on this call that have been following us for a long time, they remember the days when Beauty was not as consumer-centric and not able to grow its appliance business. The volumizer is not the only driver of that. It's just the biggest one. What really happened was we got woken up on the power of consumer-centric innovation in Beauty and then started to come out with a whole bunch of products. So for example, there's a new set of copper tong straightening irons. I think we've shown them to you in the past, Linda, that have just done very well. Our market share in the straightening iron segment of the beauty category, which has nothing to do with volumizers, has also increased. And in the case of curling irons, we're the reigning kings of the salon, curling iron business with the gold Hot Tools curling irons. So innovation in those areas is helping us a ton. Then you take volumizers, we're well past the original boom of volumizers and three and four generations in with a proliferation of volumizer spin-offs that are making a very big difference. We think we've created a new sub-segment to the category entirely. There are two or three other - I don't know if they're gangbuster innovations of that same level, but they're very meaningful to consumers. We know it from our testing. We know it from our insights. And then on Drybar, we're now extending many of those innovations into Drybar to drive its business at the higher end in Prestige, so we can capture the good, better and best of the market. So those will be on volumizer. On volumizer itself, you might think, this train's going to slow. We do see growth prospects for Beauty during fiscal '21 with the tailwind from things reopening and also from further international expansion and not just volumizer. On your Drybar question, we are expanding distribution of Drybar, which does help us, and we're also working on international for Drybar. And that said, there's a whole another play on Drybar, which is the salons are reopening. So as salons reopen, there's just more of everything to do with hair, including blow out. And the Drybar salons, well, they're actually not that big a part of the sales for Drybar, they are a big part of the brand experience and people having a demonstration of those products and use at the hands of a professional stylist on their own hair, which makes them purchase later, either online or in a or Sephora or something else. In terms of specific distribution, Amazon and Macy's are two specific examples in the United States where we've just built new distribution and we're very pleased with the sell-through that we've had so far. Brian Grass: Linda, its Brian. Just a little build on Drybar for me. If you talk to the people that came with the acquisition, they're saying that the new product development and the innovation slated for fiscal '22 is the best that they've ever seen. So hopefully, we brought something to the table, and then they helped build on what they created. But they think the new product development lineup and the innovation is better than ever in Drybar. So we're very excited about across the prospects. Julien Mininberg: And not just on the tools, but also on the liquids. And I think, wow, that's less of our sweet spot. And that said, take the liquid glass product as an example, it was developed on our watch by that team, and it's become a bestseller. Linda Bolton-Weiser: Great. Thank you, very much. Julien Mininberg: You bet, Linda. Operator: Thank you. Ladies and gentlemen, we have reached the end of the question and session, and I will now turn the call over to management for closing remarks. Julien Mininberg: Yeah. Thank you, operator, and thanks, everybody, for joining us today. We just had a terrific quarter. We've had the best year in our history. And that was after last year, which was the best year in our history. So we are very pleased coming into fiscal '22 with tremendous momentum, both on the business and the organization, tons of things to balance. And we're very happy to talk to you offline on that. We very much like where we're headed for the entire back half of Phase II, and we think the best is yet to come for Helen of Troy. So we appreciate your continued interest and support, and we look forward to speaking many of you in the coming days and also the coming weeks. Thank you very much, and have a great day. Operator: This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation. Have a great day.
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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.