Greetings. Welcome to Helen of Troy Limited third quarter 2025 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Sabrina McKee, Senior Vice President of Business Development and Investor Relations. Thank you. You may begin.

Thank you, Operator. Good morning, everyone. Happy New Year and welcome to Helen of Troy's third quarter fiscal 2025 earnings conference call. The agenda for the call this morning is as follows. I will begin with a brief discussion of forward-looking statements. Ms. Noelle Jafois, the company's CEO, will comment on business performance and then provide some perspective on current trends. Then Mr. Brian Grass, the company's CFO will review the financials in more detail and discuss our outlook. Following this, we will open up the call for Q&A. 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 similar words are words identifying forward-looking statements. Forward-looking statements are subject to 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 may be calculated differently than the non-GAAP financial information disclosed by other parties. The company cautions listeners not to place undue reliance on forward-looking statements or non-GAAP information. Before I turn the call over to Ms. Geoffroy, I would like to inform all interested parties that a copy of today's earnings release and related investment deck has been posted to the company's website at www.HelenOfTroy.com and can be found by navigating to the Investor Relations section of the site or by scrolling to the bottom of the home page. The earnings release contains tables that reconcile non-GAAP financial measures to to their corresponding gap-based measures. I will now turn the conference call over to Ms. Geoffloff. Thank you, Sabrina.

Happy New Year, everyone, and thank you for joining us today. We are pleased with our third quarter results that are within the outlook range we provided in October, despite continued cautious consumer spending on discretionary purchases and a week caught cold and flu season globally. We are also pleased that our Tennessee distribution facility is running as designed, handling the volume of our heaviest quarter well. We continue to anticipate we will achieve our forecasted labor efficiencies by fiscal year end. We also made further progress during the quarter on our fiscal 25 efforts to reset and revitalize our brands with improved results, particularly in our home and outdoor portfolio. Project Pegasus remains on track with lower year-over-year product and commodity costs, having a positive impact on our gross profit margin and providing critical fuel for reinvestment in our brands and business. We also see continued progress on our long-term strategic initiative. As you may recall, one of those strategic priorities was the formation of the North American Regional Market Organization, or NARMO, which in addition to our international RMO, is intended to make our brands more available with a shopper shop through incremental distribution gains. During the quarter, we continue to benefit from the meaningful net distribution games won in the first half of fiscal 25 and further expanded distribution in the third quarter. Fiscal year to date, we have grown our U.S. weighted distribution by 11% year over year. We have also gained a meaningful distribution internationally through a combination of new channels and new distributor partnerships. Another strategic initiative we have made progress on is use of data and analytics across all facets of our business. For example, we continue to use our marketing mix modeling data to prioritize investment opportunities across our brand portfolio and also to select the marketing tactics where we see the best ROI potential. These efforts contributed to market share growth in multiple categories with seven of our key categories growing or maintaining share this fiscal year through November in our U.S. measured channels, and improved POS and share across multiple must-win markets internationally. Another important long-term strategic initiative is to refine and shape our portfolio with a focus on maximizing profitable growth. Subsequent to the end of the third quarter, we announced the closing of our acquisition of Olive in June. We are very excited to add Olive in June to our portfolio of leading brands and to welcome passionate associates and visionary leadership team to the Helen of Troy family. Olive and June is an excellent fit with our goal of continuing Better Together M&A, both strategically and financially. The brand complements our existing beauty portfolio and broadens us beyond the hair category, adding a high-growth and high-margin consumables business that is immediately accretive to Helen of Troy. Olive and June's innovative-driven performance, highly relevant vision of democratizing nail care for everyone award-winning products and unique consumer engagement model are impressive and inspiring most recently they were awarded beauty inks 2024 breakthrough beauty brand in math and they introduced a new gel polish platform in the third quarter that is outperforming expectations as we mentioned previously the olive and june management team and associates will continue to drive both the strategy and operation of the business working with the support of Helen F. Troy's leadership to fully realize the brand's potential. We see significant growth potential in 11 June as the team continues to build on the brand's strengths and consumer obsession and breakthrough commercial and product innovation, in addition to leveraging Helen F. Troy capabilities to help expand availability with increased distribution. We will continue to consistently evaluate our brand portfolio and remain disciplined in our approach to shaping it through both acquisition and potential divestiture to position the company for long-term success and growth. With acquisitions, we will continue to look for brands that have strong global growth potential, are financially accretive, and meet our Better Together criteria. Now let's turn to third quarter performance across our portfolio. Home and Outdoor performed very well with growth in all three brands. In Wellness, Braun and Vicks were main leaders in their respective categories, even as those categories have been impacted by a weak cough cold and flu season in beauty we know there is more work to be done but we did make further progress with focused actions to improve the fundamentals of the beauty business and its brands international was again a highlight of the quarter with sales growth of seven and a half percent primarily driven by strength in home and outdoor starting with home and outdoor for octo growth was driven by distribution gains and continued shelf productivity at Walmart, as well as higher international sales driven by growth in EMEA and LaSanne. In October, OXO expansion at Walmart continued across kitchen and organizations, notably with the introduction of our POTS food storage line in over 2,000 Walmart stores. In November, OXO Top began an approximately 350 store test at Walmart. It's early days, but we are seeing positive momentum and are excited at this expansion opportunity for our well-regarded top line. OXO continued strong Walmart sales momentum into the holidays with significant sales growth versus the same period a year ago, driven by continued brand momentum and the expanded distribution. OXO also gained additional distribution in the grocery channel. In the U.S., OXO continues to grow its leading market share fiscal year to date in its key categories, including kitchen utensils, where the category has normalized post-COVID and post-retailer shifts from specialty to mass, and dry food storage, where the category has been hindered by consumers' cautious spending. As mentioned last quarter, we recently launched our OxoBrew Rapid Brewer Coffee Maker, building on the strength of our coffee line and offering a portable option for great-tasting hot coffee or cold brew concentrate in less than five minutes. The Rapid Brewer is performing very well with strong POS and was recently the number one new release in coffee machines on Amazon during the important Thanksgiving shopping week. We received exciting earned social media coverage as award-winning and highly respected coffee influencer and barista Morgan Ekroff hosted a favorable and informative video review of the OXO Brew Rapid Brewer on their YouTube channel, amassing strong engagement. OXO also continues to serve the consumer in trend-right ways with the introduction of ceramic-coated metal bakeware in November, just ahead of Thanksgiving. Turning to Hydroflask, we are pleased with the brand's positive momentum during the quarter, reflecting our focus on revitalizing the brand through innovation, distribution, and marketing. Growth in the quarter was driven by initial distribution gains at Target and a new essential hydration tumbler and bottle set offering at Costco. International sales were also strong, fueled by distribution expansion in EMEA, APAC, and LATAM as we continue to leverage opportunities to draft both Osprey and OXO's strengths and create stronger distributor partnerships. Hydroplast e-commerce over-delivered, driven by stronger-than-forecasted POS that lifted post-Labor Day replenishment and stronger-than-forecasted performance on Prime Day, with Hydroplast achieving the number one bestseller ranking within water bottles during the event. Hydroplast continues to win additional shelf space with more permanent placement in both the housewares and sporting goods sections at Target early in the fourth quarter and is extending its presence in Canada. The brand also continues to drive engagement through relevant social media content, highlighting its popular seasonal offerings for the holidays, such as festive colorways, gift sets, and personalization options, and its sponsorship of the Charlie XBX Sweat Tour. We also took the opportunity to remind our consumers of HydroClap's long-standing commitment to provide them with top-quality products supported by, for example, the rigorous testing of our three leak-proof lids, the Flex Sips lids, the Flex Straw Caps, and the Chug Caps that fit across our various bottles and tumblers. Osprey continues its momentum in everyday packs. The Daylight Fall 2024 Travel Launch has been very successful, helping drive a double-digit sales increase for the Daylight line. The Daylight Expandable Travel Pack has been a top online seller since launch and is receiving strong Amazon reviews. The brand also did well internationally with growth across all regions. We were honored that Osprey was included in Fast Company's list of Brands That Matter 2024 for the brand's commitment to sustainability through its use of recycled content in the main body fabric of 98% of its textile products, connecting people of all sizes with the outdoors with its extended fit collection, and for the brand's support of local communities. During the quarter, we also successfully integrated Osprey into our ERP system and our distribution network in the U.S. and Europe. I am pleased to share that we went live with this integration with minimal issues and have been successfully shipping our Osprey B2B and direct-to-consumer business from these facilities. This is an example of our focus on elevating our operational discipline. I am pleased with the team's strong planning and execution of this important integration. Now turning to beauty and wellness. For beauty, many of the key trends we spoke about last quarter continued in the third quarter with POS softness across our portfolio. Looking at the categories, overall growth for both hair appliances and hair liquids is moderating. In hair appliances, we continue to see a bifurcation with demands stronger for high-end appliances at price points above $100. Despite category softness in the below 100 price point appliances, Revlon gained momentum at mass and online, reflecting our value reframing and strong activations for holiday. The Revlon Holiday Palette in Walmart from early October through December featured the Volumizer and Root Booster and drove significant year-on-year growth. The Revlon Volumizer remains the number one selling item in units within the hairplanes category. Drybar launched three new holiday kits and a new triple shot interchangeable blow dryer brush, which continues to climb in sales and popularity of Amazon and Sephora as one of the brand's top tool SPUs. Looking forward, we believe we have some promising innovation on the appliance side to help bring some news and momentum back to this brand. Pearl Smith is benefiting from our incremental growth investments across both innovation and marketing. At the beginning of the quarter, we launched Shake and Shine, a revolutionary curl-refreshing mist that is ideal for extending your wash day look. It has quickly become one of CurlSmith's top-selling products. Our data-driven marketing insight tells us that the awareness campaigns we ran ahead of Black Friday had their intended impact. ETC was up significantly, and we saw the biggest lift in new consumers to the brand that we have seen in the last year. CurlSmith's consumer retention is the strengths driven by product efficacy and instructional content, we are excited to see our increased focus on top of funnel marketing bearing fruit to increase brand awareness. Turning to our wellness business. As discussed last quarter, we gained new or expanded distribution on Braun thermometers at CVS, Costco, and Walmart, which are all contributing to positive POS trends for the brands. Offsetting this has been a weak cough, cold, and flu season. Data indicates that through November, U.S. illness rates are down below the slow start we saw same time last year and at the lowest levels in the past eight years, excluding the COVID anomaly year of 2020 to 2021. Illness rates are similarly low in Europe and APAC. Subsequent to quarter end, data through December 21st shows illness rates have remained below the prior year and well below historic averages. While this is contributing to overall softness in the humidification and thermometry categories, Vicks and Braun have maintained their leading market shares. Vicks remains by far the number one brand in Rx humidification, and Braun and Vicks remain the number one and number two brands respectively in the thermometry category. In water filtration, Pure continues to grow share with strong POS and is gaining share in Pitcher Systems as the brand continues to highlight the relevant value reframing message that Pure can save over $75 per month versus bottled The brand team also quickly put activation in market to leverage the renewed focus on cleaner drinking water, highlighted by the government's directives for local municipalities to identify and replace lead pipes over the coming decades. As the number one selling lead-reducing filter brand, PURE launched an initiative to educate consumers to help them access cleaner drinks and water. The campaign included educational resources available on the PURE website and a $25,000 donation to the Water Quality Research Foundation to support education and access to water testing kits for schools in need nationwide. These are great examples of leveraging our leading products with relevant and timely commercial activations. In summary, we remain focused on executing our strategic initiatives while we continue to navigate the challenging and evolving consumer environment. Since we last reported earnings, three large retailers have filed for bankruptcy, including the Container Store, which is a meaningful customer for Ocso. We also continue to see the widely reported bifurcation in spending between higher income and lower income households. While holiday spending overall is up year over year, it is driven by higher-income consumers purchasing higher-priced items, while lower-income consumers continue to struggle, prioritizing necessities over discretionary goods. We are flexing our portfolio and go-to-market execution to meet our consumers where they are with relevant product assortment and brand messaging. As we discussed, we are on a journey to reset and revitalize our brands. Despite some headwinds in the third quarter from the macro factors I just mentioned, we continue to make progress on our initiative and the data tells us our investments are bearing fruit. We believe we are building a stronger, more collaborative, data-driven, and disciplined Helen of Troy that is better positioned to maximize the potential of our brands verbally. Lastly, before I turn it over to Brian, I want to give thanks to everyone at Helen of Troy for being part of why we have earned two important recognitions including a significant jump in ranking to number 16 in the 2024 Healthiest 100 Workplaces in America which recognizes people first organizations that prioritize the well-being of their associate population and for the third year in a row recognition by Newsweek as one of America's most responsible companies 2025. Now I will turn it over to Brian.

Thank you, Noelle, and good morning, everyone. I'm pleased to report results that were within the Outlook range for net sales and adjusted EPS we provided in October, despite the weaker-than-expected winter and illness season. We also increased our gross profit and adjusted operating margins, even as we continue to invest in our business for long-term health. During the quarter, growth investment for both product innovation and marketing support increased approximately 140 basis points year over year. As Noelle mentioned, we are beginning to see the benefits of that growth investment in terms of market share improvement for many of our key brands. After the end of the quarter, on December 16th, we announced the closing of the Olive and June acquisition. all of in June represents a great addition to our portfolio and is immediately accretive to our revenue growth rate gross profit margin adjusted EBITDA margin adjusted EPS and our expected ongoing adjusted EPS growth rate we borrowed a principal amount of 235 million on our revolver to pay the initial cash consideration of 229.4 million net of cash acquired as of On December 16th, 2024, inclusive of these borrowings, we now have swapped an aggregate amount of $550 million for 56% of our outstanding floating rate debt to an average fixed SOFR rate of 3.9% through February 2026. Our pro forma net leverage ratio was three times at the time of closing. I'll now move on to a more detailed discussion of our third quarter results. consolidated net sales declined 3.4 percent sales in our home and outdoor segment increased 4.3 percent driven by growth in all three brands and strengthened international this was more than offset by a decline in beauty and wellness which was unfavorably impacted by weaker than expected winter and illness season during the quarter which i will further discuss later in my remarks consolidated gross profit margin increased 90 basis points to 48.9 percent the increase was primarily due to favorable inventory obsolescence expense year over year and lower commodity and product costs partly driven by project pegasus initiatives gap operating margin for the quarter was 14.2 percent compared to 19.5 percent in the same period last year which benefited from a gain on the sale of our El Paso facility of 34.2 million for 620 basis points on an adjusted basis operating margin increased 30 basis points to 16.6 percent the increase was primarily driven by lower annual incentive compensation expense favorable inventory obsolescence expense year over year and lower commodity and product costs partly driven by project pegasus these factors were partially offset by the incremental growth investment of approximately 140 basis points I referred to earlier and the impact of unfavorable operating leverage on a segment basis home and outdoor adjusted operating margin increased 150 basis points to 18.4 percent driven by favorable inventory obsolescence expense year over year lower annual incentive compensation expense and lower commodity and product costs these factors were partially offset by incremental growth investment adjusted operating margin for beauty and wellness declined 100 basis points to 15 percent primarily due to incremental growth investment and the impact of unfavorable operating leverage these factors were partially offset by lower annual incentive compensation expense lower outbound freight lower commodity and product costs and favorable inventory obsolescence expense year-over-year. Our tax rate in the third quarter was 21.4 percent compared to 19.5 percent last year. The year-over-year increase is primarily due to the impact of Barbados tax legislation enacted during the first quarter of fiscal 25, partially offset by the comparative impact of higher tax expense recognized on the gain on the sale of the El Paso facility in the same period last year net income was 49.6 million or two dollars and 17 cents per share non-gap adjusted eps was two dollars and 67 cents per share reflecting lower adjusted operating income and beauty and wellness and a higher adjusted effective tax rate partially offset by higher adjusted operating income in home and outdoor lower interest expense and low lower diluted shares outstanding we ended the third quarter with total debt of 734 million a sequential increase of 21 million compared to the second quarter this reflects higher inventory levels due to the impact of a weaker than expected illness season and our strategy to build targeted inventory levels to capture potential demand and to defer potential tariff impacts for production we are transitioning out of china in the near term we also held more cash on the balance sheet due to the timing of customer payments received at the end of the quarter our net leverage ratio was 2.35 times roughly in line with the end of the second quarter turning now to our outlook for fiscal 25 we are updating our expectations for consolidated net sales adjusted eps adjusted EBITDA sales by segment free cash flow and ending net leverage ratio there are two key changes from our prior outlook these include an unfavorable revision to our wellness revenue outlook to reflect our expectation that the global illness season will be well below historical averages and the incremental contribution from the olive in june acquisition in terms of the impact of illness we came into the fiscal year assuming an average cough cold flu season excluding the covet anomaly year of 2020 2021 u.s illness incident incidents through december is at an eight-year low we are now assuming the season will be well below historical averages for the full year this adversely impacted our third quarter net sales by approximately approximately 10 million dollars and we estimate the unfavorable impact to be 15 to 20 million dollars in the fourth quarter while there is a possibility that illness incidents could increase we do not expect retailers to place meaningful incremental replenishment orders as we are now roughly midway through the season our outlook now includes an expected incremental net sales contribution in the range of 17 to 18 million dollars and adjusted eps in the range of five cents to seven cents from the olive in june acquisition for the partial period from the date of transaction closing on december 16th through the end of fiscal 25. the olive and tune outlook reflects a slower time of year in their typical operating cycle after the holiday selling season we now expect net sales between 1.888 billion and 1.913 billion which implies the decline of 5.8 percent to 4.6 percent and reflects the two key changes i just discussed as well as the previously disclosed unfavorable impact of approximately five million dollars due to shipping disruption from the automation startup issues at our tennessee distribution facility and the impact of the krill smith erp integration challenges of approximately three million in the first quarter in terms of our net sales outlook by segment we now expect a home and outdoor decline of 0.7 percent to growth of 0.6 percent which continues to include the unfavorable impact of shipping disruption at our Tennessee distribution facility of five million dollars during the first quarter and a beauty and wellness decline of 10.3 percent to nine percent which continues to include a year-over-year headwind of approximately one percent related to the expiration of an out license relationship and now includes a revised expectation for an illness season well below historical averages as well as the incremental contribution from the olive in June acquisition we now expect gap EPS of four dollars and sixty cents to five dollars and two cents for the full year and non-gap adjusted EPS in the range of seven dollars and fifteen cents to seven dollars and forty cents which includes estimated accretion of five to seven cents from the olive in June acquisition for the partial post-closing period We now expect full-year adjusted EBITDA of $292 to $295 million, which includes an estimated contribution in the range of $3 to $4 million from the Olive and June acquisition. Our adjusted EBITDA outlook implies margin compression of approximately 130 to 140 basis points year-over-year, with approximately 50 basis points coming from the automation startup issues at our distribution facility. We continue to make incremental investment into product innovation and marketing for the long-term health of our business. We are preserving the year-over-year dollar increase in growth investment spending, which now translates to a range of 120 to 130 basis points as a percentage of sales. With respect to Project Pegasus, as Noel mentioned, we remain on track with our savings targets and cadence and expect that restructuring charges will be largely completed in fiscal 2025. We now expect full-year interest expense of approximately $50 to $52 million, which includes the impacts of additional debt borrowed for the Olive and June acquisition, the interest rate swaps executed in the third quarter, and recent interest rate decreases made by the Federal Reserve. We expect a gap-effective tax rate range of 25.8% to 27.6% for the full fiscal year, and non-GAAP adjusted effective tax rate range of 18.6% to 19.4%. We now expect capital and tangible asset expenditures of between $33 and $36 million for Fiscal 25, which includes remaining equipment and technology of $12 to $13 million associated with our Tennessee distribution facility. We now expect free cash flow in the range of $145 million to $155 million, which reflects key changes from our previous outlook the lower overall revenue and weaker illness season is expected to unfavorably impact our full year cash flow results compared to our prior expectation we also begun to further build strategic inventory levels in advance of potential tariffs as i mentioned earlier which was not included in our previous outlook we now expect net leverage ratio as defined in our credit agreement to be between 2.85 and 2.75 times by the end of Fiscal 25. In closing, we've seen progress in our efforts to reset and revitalize our business in Fiscal 25 while ensuring that we are set up for success in the future. As we look forward to Fiscal 26, we believe that many of our investments and initiatives are beginning to bear fruit. The automation system at our Tennessee distribution facility is now fully functional, and we expect to realize significant efficiency gains and scale for years to come. We improved our portfolio with the completion of the Olive in June acquisition after the end of the quarter, which we believe will be an accretive growth contributor to beauty and wellness while we continue to work on improving the fundamentals of the core business. We've enhanced key processes that we believe will unlock greater working capital efficiency and will look for opportunities to further optimize your balance sheet, to quickly pay down debt and consider further accretive capital deployment. Our initiative to diversify our supplier base outside of China is making solid progress with more opportunities on the horizon. We generated significant investment fuel with Pegasus and are now focused on optimizing our investments to achieve maximum returns and productivity going forward. Finally, we intend to build on the momentum of Pegasus with the next phase of ongoing productivity initiatives and system enhancements, create further investment fuel, offset potential tariff impacts, and drive earnings accretion. With that, I'll turn it back to the operator.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. In the interest of time, please limit yourself to one question, one follow-up question, and then re-queue for additional questions. One moment while we pull for questions. Our first question is from Bob Libich with CJS Securities. Please proceed.

Good morning and Happy New Year.

Happy New Year, Bob.

Thanks. Yeah, so I wanted to start with Iron Giant with the distribution center. Obviously, congrats on getting the kind of headwinds behind you here. Could you remind us of the kind of benefits now that you expect? What benefits should you get? How long does that take? And how does the O&J acquisition impact your distribution centers and Iron Giant in particular, if at all?

Thanks, Bob. I'll start and then I'll ask Brian to build from there. You know, overall, as you know, we've, you know, the Iron Giant or Tennessee Distribution Center has been a major investment and a big project for us for some time. And we're excited about the capability that it provides us in a myriad of ways, you know, both in full case volume for the home and outdoor business, which we've been shipping out of TNDC for quite some time very well. and then also in kind of the less than full case or direct-to-consumer business for home and outdoor as well. So that, you know, that was that last piece that was the automation that was kind of coming up towards the end. It was the last piece of the distribution facility we had to get working that we struggled with in quarter one, really pleased with the team's efforts to get that working, particularly, you know, during this really busy holiday period, and we were able to accomplish that quite nicely. You know, I think at this point when it comes to Olive in June and how it will impact that acquisition, as we talked about when we made the acquisition, we haven't assumed that in yet. You know, I think over time we probably will and can bring some productivity to their direct-to-consumer business. They have a pretty substantial direct-to-consumer business, but we are not currently assuming that. we are you know currently assuming that we're going to operate all of in june as they are um you know a bit as a standalone and then look for those kinds of opportunities over time so i would say that that will be you know upside uh if you will when when we get to that to that point brian do you want to build yeah i would add by saying the the benefit the vision for the benefit uh from iron giant is similar to what we laid out it remains the same actually from what we laid out in the investor day materials it's just been delayed a bit by um the automation um challenges

that we had and had to get through so in in those materials we kind of called out our you know distribution cost as a percentage of sales being in the five five plus percent range in the vision after we do, you know, get Iron Giant to peak efficiency and make the other distribution moves that we have planned is that we go to a rate of more like, you know, in the mid threes, 3%, 3.5% ish as a percentage of sales over time. So we still think we're on track to achieve that benefit. It's just taken a little bit longer as we had to get through the last speed bump that we had and then just a little bit on all of in june you know if you compare our costs of doing distribution to what they're currently incurring there is a pretty big opportunity there we'll be uh careful to um you know pursue that opportunity and i think we're starting uh the the partnership of you know doing less less less is more kind of thing but as as noel said we see meaningful opportunity there to to add some efficiency and squeeze out some more accretion which we have not factored into any of our you know kind of pro forma estimates or forecast so

it would be upside going forward okay super thanks for all those details and then as my follow-up next question you touched on this briefly as it relates to tariffs but how do you plan plan for tariffs when you don't know what they're going to be or how they're going to be and things like that. You mentioned some inventory. Maybe you can elaborate there, but just give us your latest thoughts on how you guys go about planning. This is like a macro question for everyone. It's not specific to you, but for an event that may or may not happen at a magnitude that could be considerably different and all that kind of stuff.

Yeah, thanks, Bob. I'll start briefly and then turn it over to Brian, but, you know, I think I would just echo what you said. You know, I think, you know, there are changing, you know, changing stories right now on what that's going to look like and what, you know, what areas and what products, you know, the tariffs may or may not be effective on, what the magnitude of the tariffs would be, whether the tariffs would be targeted on only China or more broadly than that. And so, you know, the inauguration is literally days away. So I think, you know, we'll get some more clarity once President-elect Trump is in office and we know exactly where he's going. That said, we do believe that diversification is a smart move for us, and that's what we are pursuing.

And I'll let Brian kind of touch on where we are and some of those levers. yeah i think what what noelle ended with there is the key point what we try to do is ask ourselves the question of does it make sense to make the change even without tariffs so that we're not in a position where we regret um transitions or changes that we made um and tariffs don't come to be in in these particular categories so that's kind of our north star is is it's a broader concept in our mind which is diversification outside of China and not being so concentrated that's really the theme that that we're using to make our choices and in every case where we're looking at making a transition out of China asking ourselves the question of does it make sense even if tariffs don't come to be so it is a difficult algorithm to solve when you don't know where it's totally going. Recent reports have said that it may be more focused on items, certain sectors deemed critical to national or economic security, which would probably exclude a lot of our categories. But there are reports that are contrary to that. We just think the level of diversification that we're pursuing makes sense either way.

Okay, great.

Thanks so much.

Our next question is from Peter Grom with UBS.

Please proceed. thanks operator good morning everyone uh happy new year and hope you're doing well um two for for me and i guess i just want to start on kind of the fourth quarter i'd love to just get some perspective on kind of the underlying drivers for from a top line perspective it seems like a pretty wide range with you know call it two months to go here so can you maybe just walk us through the underlying assumptions a bit more what would put you at the high end versus the lower end And I guess it doesn't really sound like there's a lot of room for that $15 million to $20 million headwind from lower illness to change. So just kind of curious what the key variables we should be watching over the next couple months are.

Hi, Peter. Happy New Year. Thanks for joining in. You know, what I would say, you know, what I see in the fourth quarter is continued strength in home and outdoor. work. I'm pleased with the progress that we're making there. We saw growth in the third quarter on all three brands. We're seeing some sequential improvement on Hydroflask. We're seeing share growth on OXO in its two key categories, kitchen utensils and dry food storage. Osprey also continues to be strong across all regions and nice share growth in its extended travel and everyday lifestyle packs. And so I, you know, look to see continued improvement and continued progress along those lines in home and outdoor. On the beauty and wellness side, you touched on it, you know, the very low global illness that we're seeing is really impacting our wellness business. We do have strong brand positions, you know, VIX and Rx humidifiers and then Braun and VIX and thermometers are both, you know, gaining share, maintain very strong positions, but the categories are just way down based on kind of that eight-year low with the exception of that COVID year and similarly low seasons in EMEA and APAC. And so that's really the biggest driver and the change in our outlook for the fourth quarter there. We have baked in softer performance on beauty, and I would say what we saw in the third quarter was in line with what we forecasted. And so I feel like we forecasted where our business is on beauty. The real driver of the change here is the illness season.

Brian, anything you'd like to add? no i would just say that the environment continues to be uh pretty highly variable and and you know there's cons there's customers of ours that that are you know doing better and there's other customers that that are not doing as well and and you know that variability um kind of with the consumer and the retailers is part of the explanation as to why the range might be a little bit wider than you were expecting. Makes sense.

Okay. And then just, you know, I guess just looking ahead here, you know, this year has been, you know, reset and revitalized, but kind of where are we in that process? And I'm just going back to the targets outlined at the Investor Day. I mean, do you think those targets or growth rates outlined are still achievable at this point in time? And if so, when do you kind of expect we could see that? And I guess what I'm really trying to get as should we anticipate fiscal 26 being another year of this kind of continued reset and revitalize and kind of growth below those long-term or below that long-term algorithm or do you think it's plausible that we can kind of you know approach those targets as we look out for next year i know that's a lot of a lot of moving pieces and we'll get more color in april but just you know anything we should be kind of thinking about as we sit here today as it relates to 26 yeah peter what i would say right now is you know the long-term targets that we have out there stand we haven't we haven't revised them now as as you also ended your question you know we're in the midst of our budgeting process right now we'll be sharing our outlook for fiscal 26 in late april so you know that will be the moment i think that we'll um you know we'll be

able to provide a lot more color on what we're seeing in fiscal 26. um you know i think i continue as as i just said home and outdoor i feel like is moving in the right direction international is moving in the right direction. I think, you know, wellness has underlying stability, but a lot of our brands are, you know, subject to these seasonal, you know, whether it's illness season or other events that, you know, that can swing that are harder for us to control or predict, if you will. And then the beauty business, we've got more work to do. And I think we're making some progress. We've got some, I would say, green shoots on the less than $100 hair appliances. You know, Revlon performance in mass is solid. Could be better, but solid. Where we really, you know, have some room for improvement is on those appliances over $100 where a lot of the growth is, and that's still a work in progress. So that's sort of how I'm seeing the portfolio and where we are in the journey overall. all. And I think we can give you more perspective on how we see that shaping up numerically and longer term as we come in late April. Brian, anything you would add?

No, perfectly said.

Well, thanks so much. I'll pass it on.

Thanks, Peter. Our next question is from Rupesh Park with Oppenheimer and Company. Please proceed.

Good morning, and thanks for taking my questions.

So just going back to some the distribution gains you're seeing oxo hydrofloss etc just want to get a sense of how the velocities are performing at the new distribution that you're winning hi rupesh happy new year great to hear your voice um so distribution gains you know clearly in home and outdoor we've gotten some major distribution gains and they're into into retailers who represent significant category volume so the potential with that kind of distribution gain to expand our household penetration, our velocity, our market share are really significant. And, you know, I'll kind of talk to maybe OXO and Hydroflask as two examples that are at a bit of a different point in where we are. OXO kitchen utensils, as you know, and Walmart has, you know, been in distribution a little bit longer, so we've got more perspective and more data that can inform us there. And what we see is double-digit household penetration expansion for AXA since we made that move. So that tells us that it is meaningfully expanding the footprint of the brand because Walmart's share of the kitchen utensil category is pretty significant. So we're reaching a much broader audience of consumers by being in distribution at Walmart. The velocity has been quite strong there. We see overall market share growth since we've expanded into Walmart. And all of that strong performance is gaining, is earning the brand kind of more opportunities to expand into other OXO categories as I mentioned in my remarks pop containers have gone into the home organization part of Walmart we've got a top test going etc so all of that is exactly what I want to see when we think about expanding distribution on the hydroflask side I would say it's a little bit too early to tell on what we're doing there What we do know is in the insulated beverage category, the category is growing in customers like Target and Costco, because as we think about how that category is evolving from sports enthusiasts into more women, Gen Z consumers, et cetera, they shop a lot at those customers. And so we know that's where the category is growing there. It's declining or flat in kind of the historic sports and outdoor channel. So similar at OXO, it's the right place for the brand to be because that's where the category is. Our distribution for Hydroflask and Target is very initial. We have some off-shelf placement. We expect to get broader placement, in fact, in kind of shipping now, if you will, in home and the sporting goods. so I think we'll have a lot more perspective a few months down the line once that takes hold and we see what the velocity is doing. I would say on Costco we have a little bit more data. I think I mentioned this last quarter that the initial program did show strong velocity such that Costco ordered a replenishment beyond what we initially forecasted for the double pack that we had in in costco um so that's that's kind of how i i would characterize the uh the performance of the distribution great and my one follow-up question is just on the olive in june acquisition brian you gave the accretion benefits for this year is there a way to help us quantify what the carrier benefits are to into next year related to the creation i guess for q1 q2 and q3 presumably yeah without providing specific guidance which which we're not doing yet i think you can get

somewhat of an idea from the accretion based on what we gave you in q4 i think you'd have to account for the fact that that's a partial period of about 70 days and that it's also a softer period in their operating cycle post the holiday selling season the the transaction closed on the 17th we really didn't get any benefit of holiday selling in our results those those those sales all occurred prior to the closing date the other thing I think you'd have to factor in is they're growing quickly so if you're focused on EPS you'd have to factor in some level of EPS secretion growth throughout next fiscal year so that's how I would try to to get your arms around the level of accretion um with respect to kind of eps i'll call it um and then as we implied in our announcement adjusted even margin is north of 20 percent before any any synergies and as we talked about there there's likely synergies with respect to distribution and and other areas and and so that's positive and their gross profit margin is between 60 and 70 percent uh which we really like So that's how I kind of would think about accretion without, you know, getting into specific guidance for next year, which we're not prepared to do.

Okay, great. Thank you for all the caller. I'll pass it along.

Our next question is from Olivia Tong with Raymond James. Please proceed.

Great. Thanks. Good morning and Happy New Year. Just first, a few points of clarification. In terms of the bifurcation between high-end versus low-to-mid-end consumer, is that worsening in your view, or is your point that it continues to be a headwind? And then secondly, you talked about a few trends last quarter that seemed quite encouraging, a return to replacement cycle in home, the shelf space gains for OXO, Innovation Hydroplast, you touched on a couple of these today as well.

As you continue to rebuild some of these businesses, is there an opportunity in your view for shelf be a net positive over the next 12 months or do things like weaker cough cold the container store bankruptcy things like that sort of push the sales inflection out even further as we as we think about fiscal 26. thank you hey olivia uh happy new year thanks for joining um i would say from a macro consumer standpoint um i would i would largely say it's a continuation although So, you know, I mean, things are always shifting as you, you know, as you look at some of the, you know, macro data out there, there was a rebound in consumer confidence that wasn't really sustained in December as the index kind of dropped back to the middle of the range. The expectations index, kind of that consumer short-term outlook for income, business, and labor went down quite a bit in December. So I think, you know, there's some data out there that the consumer is definitely still concerned, you know, cautious, and as mentioned, I think that's particularly, you know, most of what we see in our business and what I think is reported widely is it's that middle to lower income consumer that's feeling that pressure the most. The higher income consumer is a bit insulated from that. So roughly the same as what we've been seeing, although some of those more recent reports would indicate that December maybe was a little bit worse in the consumer's mindset than where we were trending prior to December. And then your second question, I think, was around some of the positives and then some of the headwinds. Because I think, you know, yeah, I do see some positive, you know, some positive tailwinds for us with the distribution gains that I talked about, you know, a couple of them with OXO and Hydroflask in particular, where we're gaining meaningful placement in important retailers from a category perspective. You know, one of the key strategies that we have is be and win with a shopper shop. If you're not in a retailer where the category is quite developed, that's a gap. And so, you know, that's been a real focus for us in the North American RMO to close those gaps. And some of the ones we've talked about today are meaningful ones. So I think that's a real positive and will continue to be a tailwind. it's our responsibility to continue to bring the right assortment the right promotions the right programming so that the velocities perform once we're in those retailers so that we see that you know kind of continue to boost forward i think when it um comes to the wellness part of the portfolio you know we do have um businesses that are susceptible to to the illness season and and you know those things kind of ebb and flow typically at the beginning of each fiscal year we assume an average season it's difficult to really do anything other than that um and then you know it varies um as it does year on year on year this this year happens to be kind of an eight-year low um so that you know as we think about next year i don't see why we wouldn't again assume an average season that's kind of how we start every fiscal year um as we as we go into And then on beauty, you know, we have more work to do. As I said, I see a few places where we're beginning to make improvement. I talked about this last quarter. We did change leadership in the beauty and wellness business unit, and that new leader is really digging in across the portfolio. We've got some new innovation coming at the higher end appliances on Drybar that we're enthusiastic about. So, I see some things coming and some work happening that I anticipate should improve the performance, but it doesn't happen overnight.

All right. Thanks for all the detail. Appreciate it.

Yeah. Thanks, Olivia. Our next question is from Susan Anderson with Canaccord Genuity.

Please proceed. hi good morning thanks for taking my questions um i guess maybe just a follow-up on the beauty segment on the the liquids you mentioned some strength there i guess was that across both dry bar and curlsmith and then i think maybe you got more space with dry bar and retailers did that flow through in the quarter and i guess how was that performing thanks hi susan thanks for joining us.

I would say on hair liquids, CurlSmith continues to be a good, strong, steady performer. It is a leading brand in the textured hair segment, continues to do well. As I mentioned in my remarks, we did lean into CurlSmith with some incremental investment leading into the holiday season that did well for us. It's a brand that has really strong consumer retention based on product efficacy our really strong consumer education you know speaking from personal experience curly hair is is a bit of a journey and and so it's helpful when brands like curlsmith you know really show consumers how to use products and how to achieve certain styles and and it's the strength of curlsmith and so as we put more money behind the brand we see um we see it respond positively. So I feel like Pearl Smith, you know, continues to perform well. On dry bar liquids, I would say we've got pockets of strong performance. Dry bar Big Brew, I've mentioned that, I think I mentioned that last quarter, is a relatively new collection on dry bar that focuses on thickening. That has continued to perform very well for us, up significantly and doing well. I would also say the dry bar liquid glass collection is up after broadening the portfolio of that. That's performing well for us. So I think there are pockets, certain sub-segments within the dry bar liquids that are doing well. I'd like the whole portfolio to kind of rise, and I've talked about this before, that synergy between tools and liquids, I think is a unique position for dry bar and something that the team continues to work on, especially as we bring out more news on tools, I think that kind of double regimen play is where Drybar can really shine.

Okay, great. And then just one follow-up question on inventory. It looked like it was up in the quarter. Just curious the drivers there. And then just inventory at retail as well.

Do you feel like there's any areas that are over-inventoried or are you guys feeling pretty good about inventory at retail um brian i'll let you touch on our inventory and then um i can i can touch on retailer inventory for sure yes our inventory is higher and it's it's higher than we were expecting at this point in the year and and there are kind of two two primary factors driving that one is we had made a decision to kind of lean in in some areas where where we thought we had you know demand opportunities one of those is in thermometry where we built a strategic inventory to serve that market um for a variety of reasons and and you know with the weaker cough cold flu season we're going to end up with higher inventory at this point in the year um and and i would expect it to carry through uh the remainder of the year because you know most likely that the season is is largely done from a retailer replenishment order perspective so that's that's one factor the other factor is you know in conjunction with our tariff strategy in cases where we have line of sight to make a supplier transition out of china but could use more time managing those transitions we did make the decision and have begun to execute the acquisition or the build of more inventory levels which buys us more time before a potential impact so that we can make the supplier transitions and minimize the impact before the transition is made so we did that is the change from from our previous outlook as well as the impact of the cough cold flu season on inventory levels as we close the year so i would call those the the two primary drivers with respect to inventory and then Susan I would say on the retailer side from a retailer inventory standpoint um you know probably not surprising based on what we've talked about on on the weak illness season wellness is where we see some retailer inventory build

due to that weakness um so that's you know as Brian said I think in his prepared remarks even if illness season accelerates in the next couple of months um you know they've got a lot of inventory on hand we have plenty of inventory as he also just said so if it you know really spiked and retailers started to replenish we are ready to service it but i would say at this point their inventory levels are high um on on the wellness side i think in other parts of our business you know retailers continue to kind of react to the pressured consumer as i talked about earlier they do continue to use you know sort of some of these just-in-time inventory replenishment strategies um so sometimes we will see some shifts that happen you know based on that um but the place that probably has the highest inventory right now from our category standpoint is is wellness do the illness season okay great thanks so much for all the details good luck next quarter with no further questions in the queue i would like to turn the conference back over to management for closing remarks thank you everyone for joining us today for your continued interest in Helen of Troy. We really look forward to speaking with many of you this week as well as next week at the ICR conference and the virtual CJS conference. Thanks everyone and have a great day.

Thank you. This will conclude today's conference. You may disconnect your lines at this time and thank you for your participation.