Helen of Troy(US:HELE)2020-01-09 19:24Financial Performance - Consolidated net sales revenue increased 10.1%, or $43.7 million, to $474.7 million for the three months ended November 30, 2019, compared to $431.1 million for the same period last year[116]. - Consolidated operating income increased 29.3%, or $18.0 million, to $79.3 million for the three months ended November 30, 2019, with an operating margin of 16.7%[116]. - Income from continuing operations increased 26.5%, or $14.4 million, to $68.7 million for the three months ended November 30, 2019, with diluted EPS from continuing operations rising 31.6% to $2.71[116]. - Total sales revenue for the nine months ended November 30, 2019, increased 7.3%, or $85.8 million, to $1,265.1 million compared to the same period last year[116]. - Consolidated adjusted operating income increased 16.0%, or $29.7 million, to $215.4 million for the nine months ended November 30, 2019[116]. - Net income increased 38.9%, or $19.2 million, to $68.7 million for the three months ended November 30, 2019, with diluted EPS increasing 44.1% to $2.71[116]. Segment Performance - Housewares segment sales revenue increased by 28.2% to $183.2 million for the three months ended November 30, 2019[118]. - Health & Home segment sales revenue decreased by 1.1% to $185.8 million for the three months ended November 30, 2019[118]. - Beauty segment sales revenue increased by 5.4% to $105.7 million for the three months ended November 30, 2019[118]. - Leadership Brand sales revenue increased by $36.2 million, or 10.6%, to $379.6 million for the three months ended November 30, 2019, compared to $343.4 million in the same period last year[120]. - Net sales from Leadership Brands for the first nine months of fiscal 2020 were $1,012.3 million, representing a growth of 7.3% from $943.2 million in the prior year[123]. Transformation Strategy - The company reported a core sales growth improvement, focusing on Leadership Brands, and completed Phase I of its multi-year transformation strategy in fiscal 2019[92]. - The company expects to drive organic sales growth and margin expansion in Phase II of its transformation strategy, which began in fiscal 2020[93]. - The company is focused on improving organic sales growth and margin expansion as part of its Phase II transformation strategy, which began in fiscal 2020[93]. Acquisitions and Investments - The company entered into a definitive agreement to acquire Drybar Products LLC for a total cash consideration of $255.0 million, expected to close by January 31, 2020[94]. - The company expects to finance the acquisition of Drybar Products LLC, valued at $255.0 million, with cash on hand and borrowings from its existing revolving credit facility[94]. - The company continues to evaluate acquisition opportunities and may finance these activities through cash, stock issuance, or additional debt[184]. Restructuring and Cost Management - The company implemented a restructuring plan ("Project Refuel") targeting annualized profit improvements of approximately $8.0 to $10.0 million, with total restructuring charges estimated at $7.0 million[95]. - The company has incurred $6.5 million of pre-tax restructuring costs related to Project Refuel as of November 30, 2019[95]. - The company incurred $1.1 million of pre-tax restructuring charges for the first nine months of fiscal 2020, down from $2.6 million in the same period last year[135]. Currency and Tariff Impact - Changes in foreign currency exchange rates negatively impacted consolidated U.S. Dollar reported net sales revenue by approximately $2.3 million, or 0.5%, for the three months ended November 30, 2019[105]. - The company experienced a significant impact from tariffs on products imported from China, which began affecting the cost of goods sold in the third quarter of fiscal 2019[99]. - The company expects to mitigate the impact of tariff increases primarily through pricing actions and product cost reductions in the supply chain[99]. Cash Flow and Liquidity - Operating activities provided net cash of $101.4 million for the nine months ended November 30, 2019, down from $109.5 million in the previous year[172]. - Capital and intangible asset expenditures decreased to $13.2 million from $22.2 million year-over-year[173]. - Financing activities used $80.4 million of cash during the nine months ended November 30, 2019, compared to $84.8 million for the same period last year[174]. - The company has an unsecured total revolving credit commitment of $1.0 billion as of November 30, 2019, with $225.8 million drawn and $765.2 million available for borrowings[176]. - The current ratio improved to 2.3:1 from 2.0:1 year-over-year, indicating better liquidity[170]. Tax and Interest Expenses - Interest expense increased to $9.3 million from $8.4 million, primarily due to higher average interest rates[156]. - Income tax expense as a percentage of income before income tax was 9.6% for the nine months ended November 30, 2019, compared to 7.2% for the same period last year[159]. - The effective tax rate for the three months ended November 30, 2019, was 10.3%, compared to 6.9% for the same period last year[158]. - The company anticipates that its Macau subsidiary will be subject to a statutory corporate income tax of approximately 12% starting in 2021 due to changes in tax regulations[161].