Helen Of Troy Ltd 10-Q for FY2024 Q1

Helen Of Troy Ltd (HELE)

10-Q 2023-07-10 For: 2023-05-31

Added on April 06, 2026

About this 10-Q

Helen Of Troy Ltd filed this 10-Q on July 10, 2023, covering the quarter ended May 31, 2023 (FY2024 Q1).

Headline figures

Quarter ended May 31, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $474.67M; down 6.6% from $508.08M a year earlier
Net income: $22.58M; down 8.2% from net income of $24.6M a year earlier
Diluted EPS: $0.94; down 7.8% from $1.02 a year earlier

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Bermuda						74-2692550
(State or other jurisdiction						(I.R.S. Employer
of incorporation or organization)						Identification No.)


		PAGE

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	2

	Note 1 - Basis of Presentation and Related Information	7
	Note 2 - New Accounting Pronouncements	8

	Note 3 - Acquisition of Curlsmith	9
	Note 4 - Accrued Expenses and Other Current Liabilities	11
	Note 5 - Share-Based Compensation Plans	11
	Note 6 - Repurchases of Common Stock	12
	Note 7 - Restructuring Plan	12
	Note 8 - Commitments and Contingencies	14
	Note 9 - Long-Term Debt	16
	Note 1 0 - Fair Value	17
	Note 1 1 - Financial Instruments and Risk Management	18
	Note 1 2 - Accumulated Other Comprehensive Income (Loss)	21
	Note 1 3 - Segment Information	21
	Note 1 4 - Income Taxes	22
	Note 1 5 - Earnings Per Share	22


Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43

Item 4.	Controls and Procedures	44

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	44

Item 1A.	Risk Factors	44

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45

Item 6.	Exhibits	46

SIGNATURES		47


(in thousands, except shares and par value)	May 31, 2023		February 28, 2023
Assets
Assets, current:
Cash and cash equivalents	$	38,869	$	29,073
Receivables - principally trade, less allowances of $4,959 and $1,678	349,699		377,604
Inventory	433,913		455,485
Prepaid expenses and other current assets	24,458		24,721
Income taxes receivable	9,118		5,158

Total assets, current	856,057		892,041

Property and equipment, net of accumulated depreciation of $184,972 and $178,961	354,195		351,793
Goodwill	1,066,730		1,066,479
Other intangible assets, net of accumulated amortization of $173,232 and $168,574	549,375		553,883
Operating lease assets	37,362		38,751
Deferred tax assets, net	2,757		2,781
Other assets	6,352		7,987
Total assets	$	2,872,828	$	2,913,715

Liabilities and Stockholders' Equity
Liabilities, current:
Accounts payable, principally trade	$	226,191	$	190,598
Accrued expenses and other current liabilities	193,049		200,718
Income taxes payable	15,316		14,778
Long-term debt, current maturities	6,235		6,064

Total liabilities, current	440,791		412,158

Long-term debt, excluding current maturities	830,922		928,348
Lease liabilities, non-current	41,322		42,672
Deferred tax liabilities, net	30,789		28,048
Other liabilities, non-current	14,096		13,678
Total liabilities	1,357,920		1,424,904

Commitments and contingencies

Stockholders' equity:
Cumulative preferred stock, non-voting, $1.00 par. Authorized 2,000,000 shares; none issued	—		—
Common stock, $0.10 par. Authorized 50,000,000 shares; 24,096,946 and 23,994,405 shares issued and outstanding	2,410		2,399
Additional paid in capital	324,497		317,277
Accumulated other comprehensive income	1,232		4,947
Retained earnings	1,186,769		1,164,188
Total stockholders' equity	1,514,908		1,488,811
Total liabilities and stockholders' equity	$	2,872,828	$	2,913,715


	Three Months Ended May 31,
(in thousands, except per share data)	2023		2022
Sales revenue, net	$	474,672	$	508,078
Cost of goods sold	259,041		296,907
Gross profit	215,631		211,171

Selling, general and administrative expense (“SG&A”)	167,635		177,230

Restructuring charges	7,355		2
Operating income	40,641		33,939

Non-operating income, net	137		67
Interest expense	14,052		4,373
Income before income tax	26,726		29,633

Income tax expense	4,145		5,038
Net income	$	22,581	$	24,595




Earnings per share (“EPS”):
Basic	$	0.94	$	1.03
Diluted	0.94		1.02








Weighted average shares used in computing EPS:
Basic	24,049		23,865
Diluted	24,134		24,122


	Three Months Ended May 31,
(in thousands)	2023		2022
Net income	$	22,581	$	24,595
Other comprehensive (loss) income, net of tax:
Cash flow hedge activity - interest rate swaps	(3,092)		2,206
Cash flow hedge activity - foreign currency contracts	(623)		953
Total other comprehensive (loss) income, net of tax	(3,715)		3,159
Comprehensive income	$	18,866	$	27,754


	Common Stock			Additional Paid in Capital		Accumulated Other Comprehensive Income		Retained Earnings		Total Stockholders' Equity
(in thousands, including shares)	Shares	Par Value
Balances at February 28, 2022	23,800	$	2,380	$	303,740	$	202	$	1,021,017	$	1,327,339
Net income	—	—		—		—		24,595		24,595

Other comprehensive income, net of tax	—	—		—		3,159		—		3,159
Exercise of stock options	8	1		658		—		—		659
Issuance and settlement of restricted stock	235	24		(24)		—		—		—
Issuance of common stock related to stock purchase plan	13	1		2,274		—		—		2,275
Common stock repurchased and retired	(89)	(9)		(18,113)		—		(102)		(18,224)
Share-based compensation	—	—		16,619		—		—		16,619

Balances at May 31, 2022	23,967	$	2,397	$	305,154	$	3,361	$	1,045,510	$	1,356,422




Balances at February 28, 2023	23,994	$	2,399	$	317,277	$	4,947	$	1,164,188	$	1,488,811
Net income	—	—		—		—		22,581		22,581

Other comprehensive loss, net of tax	—	—		—		(3,715)		—		(3,715)
Exercise of stock options	5	1		211		—		—		212
Issuance and settlement of restricted stock	120	12		(12)		—		—		—
Issuance of common stock related to stock purchase plan	23	2		2,166		—		—		2,168
Common stock repurchased and retired	(45)	(4)		(4,442)		—		—		(4,446)
Share-based compensation	—	—		9,297		—		—		9,297

Balances at May 31, 2023	24,097	$	2,410	$	324,497	$	1,232	$	1,186,769	$	1,514,908


(in thousands)
Assets:
Receivables	$	4,211
Inventory	7,890
Prepaid expenses and other current assets	119
Property and equipment	212
Goodwill	117,108
Trade names - definite	21,000
Customer relationships - definite	12,000
Deferred tax assets, net	360
Total assets	162,900
Liabilities:
Accounts payable	1,401
Accrued expenses and other current liabilities	2,813
Income taxes payable	2,572
Deferred tax liabilities, net	8,187
Total liabilities	14,973
Net assets recorded	$	147,927


April 22, 2022 (acquisition date) through May 31, 2022 (in thousands, except earnings per share data)	Three Months Ended May 31, 2022 (1)
Sales revenue, net	$	3,246
Net income	439

EPS:
Basic	$	0.02
Diluted	$	0.02



(in thousands, except earnings per share data)	Three Months Ended May 31, 2022
Sales revenue, net	$	515,170
Net income	26,508

EPS:
Basic	$	1.11
Diluted	$	1.10


	Three Months Ended May 31,
(in thousands, except share and per share data)	2023		2022
Common stock repurchased on the open market:
Number of shares	—		—
Aggregate value of shares	$	—	$	—
Average price per share	$	—	$	—

Common stock received in connection with share-based compensation:
Number of shares	44,632		89,458
Aggregate value of shares	$	4,446	$	18,224
Average price per share	$	99.61	$	203.71


	Three Months Ended May 31, 2023				Total Incurred Since Inception
(in thousands)	Home & Outdoor		Beauty & Wellness					Total
Severance and employee related costs	$	484	$	408		$	892		$	10,345
Professional fees	2,269		3,357			5,626			22,375
Contract termination	—		688			688			1,223
Other	37		112			149			774
Total restructuring charges	$	2,790	$	4,565		$	7,355		$	34,717


(in thousands)	Balance at February 28, 2023		Charges		Payments		Balance at May 31, 2023
Severance and employee related costs	$	3,173	$	892	$	(2,316)	$	1,749
Professional fees	3,201		5,626		(6,026)		2,801
Contract termination	160		688		(848)		—
Other	34		149		(183)		—
Total	$	6,568	$	7,355	$	(9,373)	$	4,550


	Carrying Amount and Fair Value

(in thousands)	May 31, 2023		February 28, 2023
Assets:
Cash equivalents (money market accounts)	$	10,745	$	381
Interest rate swaps	2,527		5,746
Foreign currency derivatives	1,081		1,423
Total assets	$	14,353	$	7,550

Liabilities:

Interest rate swaps	$	822	$	—
Foreign currency derivatives	1,177		711
Total liabilities	$	1,999	$	711


(in thousands)	May 31, 2023
Derivatives designated as hedging instruments	Hedge Type	Final Settlement Date	Notional Amount		Prepaid Expenses and Other Current Assets		Other Assets		Accrued Expenses and Other Current Liabilities		Other Liabilities, Non- Current

Forward contracts - sell Euro	Cash flow	2/2024	€	27,350	$	58	$	—	$	27	$	—
Forward contracts - sell Canadian Dollars	Cash flow	2/2024	$	25,500	730		—		—		—
Forward contracts - sell Pounds	Cash flow	2/2024	£	23,525	—		—		1,150		—



Forward contracts - sell Norwegian Kroner	Cash flow	10/2023	kr	30,000	288		—		—		—
Interest rate swaps	Cash flow	2/2026	$	625,000	2,527		—		—		822
Subtotal					3,603		—		1,177		822

Derivatives not designated under hedge accounting


Forward contracts - buy Euro	(1)	6/2023	€	160	5		—		—		—

Subtotal					5		—		—		—
Total fair value					$	3,608	$	—	$	1,177	$	822


	Three Months Ended May 31,
(in thousands)	2023		2022
Cash provided (used) by operating activities:
Net income	$	22,581	$	24,595


Adjustments to reconcile net income to net cash provided (used) by operating activities:
Depreciation and amortization	10,715		10,498
Amortization of financing costs	308		253
Non-cash operating lease expense	2,338		2,543
Provision for credit losses	3,389		320
Non-cash share-based compensation	9,297		16,619

Gain on sale of Personal Care business	—		(1,336)

Gain on the sale or disposal of property and equipment	(246)		—

Deferred income taxes and tax credits	3,897		614
Changes in operating capital, net of effects of acquisitions of businesses:
Receivables	26,733		(14,639)
Inventory	21,572		(47,781)
Prepaid expenses and other current assets	(1,420)		651
Other assets and liabilities, net	(656)		(823)
Accounts payable	36,644		10,027
Accrued expenses and other current liabilities	(10,734)		(28,764)
Accrued income taxes	(3,362)		(11,205)
Net cash provided (used) by operating activities	121,056		(38,428)



Cash used by investing activities:
Capital and intangible asset expenditures	(11,877)		(76,202)
Net payments to acquire businesses, net of cash acquired	—		(148,111)
Proceeds from sale of Personal Care business	—		1,804
Proceeds from the sale of property and equipment	246		—
Net cash used by investing activities	(11,631)		(222,509)


(in thousands)	May 31, 2023		February 28, 2023

Credit Agreement (1):
Revolving loans	594,000		690,000
Term loans	245,312		246,875
Total borrowings under Credit Agreement	839,312		936,875

Unamortized prepaid financing fees	(2,155)		(2,463)
Total long-term debt	837,157		934,412
Less: current maturities of long-term debt	(6,235)		(6,064)
Long-term debt, excluding current maturities	$	830,922	$	928,348


(in thousands)	Interest Rate Swaps		Foreign Currency Contracts		Total
Balance at February 28, 2022	$	(2,126)	$	2,328	$	202
Other comprehensive income before reclassification	2,206		2,319		4,525
Amounts reclassified out of AOCI	680		(1,196)		(516)
Tax effects	(680)		(170)		(850)
Other comprehensive income	2,206		953		3,159
Balance at May 31, 2022	$	80	$	3,281	$	3,361

Balance at February 28, 2023	$	4,394	$	553	$	4,947
Other comprehensive loss before reclassification	(2,634)		(467)		(3,101)
Amounts reclassified out of AOCI	(1,407)		(338)		(1,745)
Tax effects	949		182		1,131
Other comprehensive loss	(3,092)		(623)		(3,715)
Balance at May 31, 2023	$	1,302	$	(70)	$	1,232


	Three Months Ended May 31,
(in thousands)	Home & Outdoor			Beauty & Wellness			Total
Fiscal 2023 sales revenue, net	$	234,263		$	273,815		$	508,078
Organic business	(16,751)			(22,248)			(38,999)
Impact of foreign currency	(368)			(141)			(509)
Acquisition (1)	—			6,102			6,102
Change in sales revenue, net	(17,119)			(16,287)			(33,406)
Fiscal 2024 sales revenue, net	$	217,144		$	257,528		$	474,672

Total net sales revenue growth (decline)	(7.3)		%	(5.9)		%	(6.6)		%
Organic business	(7.2)		%	(8.1)		%	(7.7)		%
Impact of foreign currency	(0.2)		%	(0.1)		%	(0.1)		%
Acquisition	—		%	2.2		%	1.2		%


	Three Months Ended May 31,
	Gain (Loss) Recognized in AOCI				Gain (Loss) Reclassified from AOCI into Income
(in thousands)	2023		2022		Location	2023		2022
Foreign currency contracts - cash flow hedges	$	(467)	$	2,319	Sales revenue, net	$	338	$	1,196
Interest rate swaps - cash flow hedges	(2,634)		2,206		Interest expense	1,407		(680)


Total	$	(3,101)	$	4,525		$	1,745	$	516


	Gain (Loss) Recognized in Income
		Three Months Ended May 31,
(in thousands)	Location	2023		2022
Forward contracts	SG&A	$	(24)	$	—
Cross-currency debt swaps - principal	SG&A	—		875

Total		$	(24)	$	875


	Three Months Ended May 31,								% of Sales Revenue, net
(in thousands)	2023 (1)		2022 (1)		$ Change		% Change		2023		2022
Sales revenue by segment, net
Home & Outdoor	$	217,144	$	234,263	$	(17,119)	(7.3)	%	45.7	%	46.1	%
Beauty & Wellness	257,528		273,815		(16,287)		(5.9)	%	54.3	%	53.9	%


Total sales revenue, net	474,672		508,078		(33,406)		(6.6)	%	100.0	%	100.0	%
Cost of goods sold	259,041		296,907		(37,866)		(12.8)	%	54.6	%	58.4	%
Gross profit	215,631		211,171		4,460		2.1	%	45.4	%	41.6	%
SG&A	167,635		177,230		(9,595)		(5.4)	%	35.3	%	34.9	%

Restructuring charges	7,355		2		7,353		*		1.5	%	—	%
Operating income	40,641		33,939		6,702		19.7	%	8.6	%	6.7	%
Non-operating income, net	137		67		70		*		—	%	—	%
Interest expense	14,052		4,373		9,679		*		3.0	%	0.9	%
Income before income tax	26,726		29,633		(2,907)		(9.8)	%	5.6	%	5.8	%
Income tax expense	4,145		5,038		(893)		(17.7)	%	0.9	%	1.0	%


Net income	$	22,581	$	24,595	$	(2,014)	(8.2)	%	4.8	%	4.8	%


	Three Months Ended May 31, 2023
	Income						Diluted EPS
(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax
As reported (GAAP)	$	26,726	$	4,145	$	22,581	$	1.11	$	0.17	$	0.94




Bed, Bath & Beyond bankruptcy	4,213		53		4,160		0.17		—		0.17
Restructuring charges	7,355		92		7,263		0.30		—		0.30

Subtotal	38,294		4,290		34,004		1.59		0.18		1.41
Amortization of intangible assets	4,657		606		4,051		0.19		0.03		0.17
Non-cash share-based compensation	9,297		641		8,656		0.39		0.03		0.36
Adjusted (non-GAAP)	$	52,248	$	5,537	$	46,711	$	2.16	$	0.23	$	1.94

Weighted average shares of common stock used in computing diluted EPS											24,134


Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (2)
March 1 through March 31, 2023	8,723	$	110.30	8,723	$	402,660
April 1 through April 30, 2023	190	90.01		190	402,643
May 1 through May 31, 2023	35,719	97.05		35,719	399,177
Total	44,632	$	99.61	44,632


		HELEN OF TROY LIMITED
		(Registrant)

Date:	July 10, 2023	/s/ Julien R. Mininberg
		Julien R. Mininberg
		Chief Executive Officer, Director and Principal Executive Officer

Date:	July 10, 2023	/s/ Brian L. Grass
		Brian L. Grass
		Chief Financial Officer, Principal Financial Officer and Principal Accounting Officer


/s/ Julien R. Mininberg
Julien R. Mininberg
Chief Executive Officer,
Director and Principal Executive Officer