Helen of Troy Limited Reports Third Quarter Fiscal 2018 Results

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Delivers Consolidated Net Sales Revenue Growth of 1.9%; Core Business Growth of 1.3%

Reports GAAP Diluted Loss Per Share of $(1.12); Adjusted Diluted EPS of $2.52

Updates Post-Divestiture Fiscal 2018 GAAP Diluted EPS Outlook to $5.42 to $5.63 for Continuing Operations

Updates Post-Divestiture Adjusted Diluted EPS Outlook to $6.85 to $7.10 for Continuing Operations

Updates Post-Divestiture Fiscal 2018 Outlook for Consolidated Net Sales from Continuing Operations of $1.440 to $1.463 billion; Growth of 2.3% to 4.0%

Helen of Troy Limited HELE, designer, developer and worldwide marketer of consumer brand-name housewares, health and home and beauty products, today reported results for the three-month period ended November 30, 2017. Third quarter fiscal 2018 GAAP results include pre-tax non-cash asset impairment charges of $82.2 million associated with the Company's Nutritional Supplements segment and $1.3 million in restructuring charges related to our restructuring plan, Project Refuel, with no comparable charges in the same period last year.

Executive Summary

  • Consolidated net sales revenue increase of 1.9%, including:
  • An increase in Leadership Brand net sales of approximately 6.4%
  • An increase in online channel net sales of approximately 18.6%
  • GAAP operating loss of $(15.6) million, or (3.4)% of net sales, which includes $82.2 million in non-cash pre-tax asset impairment charges and $1.3 million in restructuring charges, compared to operating income of $63.3 million, or 14.2% of net sales, in the same period last year
  • Non-GAAP adjusted operating income growth of 7.5% to $79.0 million, or 17.4% of net sales, which excludes the impairment and restructuring charges mentioned above, compared to $73.4 million, or 16.5% of net sales in the same period last year
  • Effective tax rate of (58.4)% compared to 3.7% in the same period of the prior year, driven by the impact of impairment charges on the tax provision
  • GAAP diluted loss per share of $(1.12), which includes $3.30 per share in impairment and restructuring charges mentioned above, compared to diluted earnings per share ("EPS") of $2.07 in the same period last year with no comparable charges in the prior year
  • Non-GAAP adjusted diluted earnings per share growth of 6.3% to $2.52, compared to $2.37 in the same period last year
  • Repurchased 311,100 shares of common stock in the open market during the quarter for $29.2 million

Julien R. Mininberg, Chief Executive Officer, stated: "We achieved solid results in the third quarter, with consolidated sales growth of 1.9% driven primarily by new product introductions, incremental distribution, and growth in international sales. Our Leadership Brands continue to perform well, gaining 6.4% with each of the seven growing during the quarter. Growth in the online channel continued to be a key driver, gaining 18.6% to now represent 17.4% of total sales for the third quarter. We drove gross margin expansion through a better mix of higher-margin sales, and increased consolidated adjusted operating margin as we benefitted from greater efficiencies from our shared services platform, even as we continued to invest in our brand portfolio and digital capabilities. This progress resulted in adjusted earnings per share growth of 6.3%. Our Health & Home and Housewares segments led sales growth in the quarter, and both segments achieved higher adjusted operating margins compared to the prior year period. In our Beauty segment, sales and profitability benefitted from new product introductions in the appliance category, which was offset by continued challenges in the personal care category. Subsequent to the end of the third quarter, we completed the sale of the Nutritional Supplements business. The sale of Healthy Directions demonstrates our willingness to sharpen our portfolio and allows us to focus even more resources on our Leadership Brands. Post divestiture, these brands, which are among our highest volume, highest margin and most asset-efficient, now represent more than 75% of fiscal year-to-date sales from continuing operations. Importantly, the direct-to-consumer systems and fulfillment capability we built for Healthy Directions remain with Helen of Troy. We continue to look for the right acquisition to further strengthen our portfolio and make use of our strong balance sheet. Meanwhile, during the third quarter we opportunistically repurchased 1.2% of our outstanding common stock."

Mr. Mininberg continued: "We are pleased with our accomplishments this fiscal year to date, which are the result of solid execution against our clear and focused strategies. We achieved overall sales growth of 2.6%, including growth in our Leadership Brands of 7.3%, improved profitability, and delivered adjusted diluted EPS growth of 12.1%. We also reduced inventory by over 5% year over year as we continue to benefit from the improved operating efficiencies that are so important to our overall transformation plan. We are therefore increasing our fiscal 2018 adjusted diluted EPS outlook range for continuing operations. We continue to prudently invest behind those brands, channels and categories that provide the best opportunities to drive growth and further improve profitability. We believe these disciplined investments in product innovation, marketing, and digital initiatives will position our company for continued long-term shareholder value creation."

 
Three Months Ended November 30,
  Housewares  

Health & Home

 

Nutritional

Supplements

  Beauty   Total
Fiscal 2017 sales revenue, net $ 124,723 $ 179,842 $ 32,163 $ 107,686 $ 444,414
Core business 3,074 9,323 (2,827) (3,731) 5,839
Impact of foreign currency   220   1,810   -   762   2,792
Change in sales revenue, net   3,294   11,133   (2,827)   (2,969)   8,631
Fiscal 2018 sales revenue, net $ 128,017 $ 190,975 $ 29,336 $ 104,717 $ 453,045
 
Total net sales revenue growth 2.6 % 6.2 % (8.8) % (2.8) % 1.9 %
Core business 2.5 % 5.2 % (8.8) % (3.5) % 1.3 %
Impact of foreign currency 0.2 % 1.0 % - % 0.7 % 0.6 %
 
Operating margin (GAAP)
Third quarter fiscal 2018 23.4 % 14.6 % (284.7) % 9.6 % (3.4) %
Third quarter fiscal 2017 23.4 % 11.2 % (0.2) % 13.0 % 14.2 %
Adjusted operating margin (non-GAAP)
Third quarter fiscal 2018 25.0 % 16.9 % 3.6 % 13.0 % 17.4 %
Third quarter fiscal 2017 24.5 % 13.7 % 5.8 % 15.3 % 16.5 %
 

Consolidated Operating Results - Third Quarter Fiscal 2018 Compared to Third Quarter Fiscal 2017

Consolidated net sales revenue increased 1.9% to $453.0 million compared to $444.4 million, which included an increase of 0.6% from foreign currency fluctuations. The net sales increase includes the contribution from new product introductions, online customer growth, incremental distribution, and growth in international sales. These factors were partially offset by an 8.8% decline in the Nutritional Supplements segment, which had an unfavorable impact of 0.6% on consolidated sales growth, a decrease in the personal care category within Beauty, and the impact of lower store traffic and soft consumer spending at traditional brick and mortar retail.

  • Consolidated gross profit margin increased 0.8% percentage points to 44.5% compared to 43.7%. The increase in consolidated gross profit margin is primarily due to favorable product mix, growth in the Company's Leadership Brands and the favorable impact of net foreign currency fluctuations, partially offset by the unfavorable impact that the revenue declines in the Nutritional Supplements segment and personal care category had on consolidated gross profit margin.
  • Consolidated SG&A as a percentage of sales increased by 0.1% percentage point to 29.6% of net sales compared to 29.5%. The increase is primarily due to higher incentive compensation expense and the unfavorable comparative impact of foreign currency revaluation year over year. These factors were partially offset by lower advertising expense, improved distribution efficiency, lower outbound freight costs, and the impact that higher overall net sales had on operating leverage.
  • GAAP operating loss was $(15.6) million, or (3.4)% of net sales, compared to operating income of $63.3 million, or 14.2% of net sales, in the same period last year. Operating loss includes pre-tax non-cash asset impairment charges of $82.2 million in the Company's Nutritional Supplements segment and pre-tax restructuring charges of $1.3 million, with no comparable charges in the same period last year. These items unfavorably impacted the year-over-year comparison of operating margin by 18.4 percentage points. The remaining increase in consolidated operating margin primarily reflects a higher mix of Leadership Brand sales at a higher operating margin, lower marketing and advertising expense, improved distribution efficiency, lower outbound freight costs, and the impact that higher overall net sales had on operating leverage. These factors were partially offset by higher incentive compensation expense and the unfavorable comparative impact of foreign currency revaluation year-over-year.
  • Income tax expense as a percentage of pre-tax loss was (58.4)%, compared to income tax expense of 3.7% for the same period last year, primarily due to the recognition of tax benefits from impairment charges over the course of the year in relation to pre-tax income, as opposed to the periods in which the charges were incurred. There were no comparable expenses or benefits in the same period last year. The expected $52.8 million tax benefit from impairment charges will be recognized entirely in the fourth quarter of fiscal 2018 relative to pre-tax income.
  • Net loss was $(30.4) million, or $(1.12) per diluted share on 27.1 million weighted average shares outstanding, compared to net income of $57.6 million, or $2.07 per diluted share on 27.8 million weighted average diluted shares outstanding. Net loss for the three months ended November 30, 2017 includes after-tax non-cash asset impairment charges of $88.6 million and after-tax restructuring charges of $1.2 million, with no comparable charges for the same period last year.
  • Adjusted EBITDA (EBITDA excluding non-cash asset impairment charges, restructuring charges, and non‐cash share based compensation, as applicable) increased 7.5% to $83.3 million compared to $77.5 million.

On an adjusted basis for the third quarters of fiscal 2018 and 2017, excluding non-cash asset impairment charges, restructuring charges, non‐cash share based compensation, and non-cash amortization of intangible assets, as applicable:

  • Adjusted operating income was $79.0 million, or 17.4% of net sales, compared to $73.4 million, or 16.5% of net sales. The 7.6% increase in adjusted operating income primarily reflects a higher mix of Leadership Brand sales at a higher operating margin, lower marketing and advertising expense, a decline in product liability expense, improved distribution efficiency, lower outbound freight costs, and the impact that higher overall net sales had on operating leverage. These factors were partially offset by higher incentive compensation expense and the unfavorable comparative impact of foreign currency revaluation year-over-year.
  • Adjusted income was $68.8 million, or $2.52 per diluted share, compared to $66.0 million, or $2.37 per diluted share. The 6.3% increase in adjusted diluted earnings per share primarily reflects the impact of higher adjusted operating income in the Company's Housewares and Health & Home segments and lower weighted average diluted shares outstanding year-over-year.

Segment Operating Results - Third Quarter Fiscal 2018 Compared to Third Quarter Fiscal 2017

Housewares net sales increased by 2.6% reflecting an increase in online channel sales, incremental distribution with existing customers, international growth, and new product introductions for both Hydro Flask and OXO brands. This growth was partially offset by the unfavorable impact of lower store traffic and soft consumer spending at traditional brick and mortar retail, and the unfavorable comparative impact of strong sales into the club channel in the same period last year. Segment net sales also benefitted from the favorable impact of net foreign currency fluctuations of approximately $0.2 million, or 0.2%. GAAP operating margin was unchanged at 23.4%. Adjusted operating margin increased 0.5 percentage points primarily due to lower incentive compensation expense and the impact of increased operating leverage from net sales growth, partially offset by higher marketing, advertising and new product development expense.

Health & Home net sales increased 6.2% reflecting growth in online channel sales, expanded international distribution, and incremental distribution with existing customers. Segment net sales also benefitted from the favorable impact of net foreign currency fluctuations of approximately $1.8 million, or 1.0%. GAAP operating margin was 14.6% compared to 11.2%. Adjusted operating margin increased 3.2 percentage points reflecting a decline in product liability expense, lower legal fee expense, improved distribution efficiency, lower outbound freight costs, a decrease in marketing, advertising and new product development expense, increased operating leverage from net sales growth, and the favorable impact of net foreign currency fluctuations on net sales.

Beauty net sales decreased 2.8% primarily reflecting a decline in the personal care category, which offset solid growth in both retail and professional appliance sales, particularly to online retail customers. Segment net sales benefitted from the favorable impact of net foreign currency fluctuations of approximately $0.8 million, or 0.7%. GAAP operating margin was 9.6% compared to 13.0%. Adjusted operating margin was 13.0% compared to 15.3% reflecting higher incentive compensation expense and the net sales decline in the personal care category and its unfavorable impact on sales mix and operating leverage, partially offset by lower media advertising expense, improved distribution efficiency and lower outbound freight costs.

Nutritional Supplements net sales decreased 8.8%, reflecting a decline in auto-delivery revenue resulting primarily from the transition to new order management and customer relationship management systems, partially offset by increases in direct mail and third-party retail sales. The segment's operating loss was $(83.5) million, and included pre-tax non-cash asset impairment charges of $82.2 million and restructuring charges of $0.1 million, with no comparable charges in the same period last year. This compares to an operating loss of $(0.1) million in the same period last year. Segment adjusted operating income was $1.1 million compared to adjusted operating income of $1.9 million in the same period last year. The decrease in adjusted operating income is primarily due to higher promotional, advertising and customer acquisition costs as a percentage of sales and the net sales decline and its unfavorable impact on operating leverage.

Balance Sheet Highlights - Third Quarter Fiscal 2018 Compared to Third Quarter Fiscal 2017

  • Cash and cash equivalents totaled $21.2 million, compared to $16.8 million
  • Total short- and long-term debt was $426.2 million, compared to $564.9 million, a net decrease of $138.7 million
  • Accounts receivable turnover was 59.1 days, compared to 57.8 days
  • Inventory was $285.6 million, compared to $301.1 million, a net decrease of 5.1%. Inventory turnover was 2.9 times compared to 2.8 times

Subsequent Events

Divestiture of the Nutritional Supplements Segment

On December 20, 2017, the Company completed the sale of Healthy Directions LLC and its subsidiaries to Direct Digital, LLC. The purchase price from the sale is comprised of $46 million in cash paid at closing and a supplemental payment with a target value of $25 million, payable on or before August 1, 2019. The final amount of the supplemental payment may be adjusted up or down based on the performance of Healthy Directions through February 28, 2018. The final purchase price is also subject to a customary working capital adjustment. The transaction is not reflected in the Company's consolidated condensed financial statements as of and for the period ended November 30, 2017.

Tax Reform

The Tax Cuts and Jobs Act was signed into law in December 2017, which represents significant U.S. federal tax reform legislation that includes a permanent reduction to the U.S. federal corporate income tax rate. The permanent reduction to the federal corporate income tax rate will have the effect of a one-time impact to the value of the Company's deferred tax assets and liabilities. Additionally, the Company expects that the tax reform legislation will subject certain of its cumulative foreign earnings and profits to U.S. income taxes through a deemed repatriation. The Company is reviewing the recently enacted tax reform's effects on its deferred tax assets and liabilities and the taxation of certain foreign earnings and profits, and expects to recognize the one-time impact in the fourth quarter of fiscal 2018. On a go-forward basis, the Company expects the impact of the legislation to result in a reduction of its effective tax rate beginning in fiscal 2019. The Company has provided its estimated tax rate outlook for the remainder of fiscal 2018 in a table accompanying the press release and will provide its fiscal year 2019 estimated tax rate outlook when it reports its fourth quarter fiscal 2018 results.

Fiscal 2018 Annual Outlook

For fiscal 2018, the Company expects consolidated net sales revenue from continuing operations in the range of $1.440 to $1.463 billion, which implies consolidated sales growth of 2.3% to 4.0%. The Company's net sales outlook assumes that December 2017 foreign currency exchange rates will remain constant for the remainder of the fiscal year and that the severity of the cough/cold/flu season will be in line with long-term historical averages. Finally, the Company's net sales outlook reflects the following expectations by segment:

  • Housewares net sales growth of 7% to 9%;
  • Health & Home net sales growth in the mid-single digits; and
  • Beauty net sales decline in the mid-single digits.

The Company now expects consolidated GAAP diluted earnings per share for continuing operations of $5.42 to $5.63 and adjusted diluted earnings per share (non-GAAP) for continuing operations in the range of $6.85 to $7.10, which excludes after-tax asset impairment charges, the Toys "R" Us bankruptcy charge, restructuring charges, share-based compensation expense and intangible asset amortization expense. The Company's diluted earnings per share outlook assumes that December 2017 foreign currency exchange rates will remain constant for the remainder of the fiscal year.

Consistent with the Company's strategies of investing in core business growth and consumer centric innovation, its outlook continues to include approximately $0.40 to $0.50 per diluted share year-over-year in incremental after-tax growth investments expanding digital marketing, advertising, new product development and e-commerce, primarily behind the Company's Leadership Brands. The diluted earnings per share outlook is based on an estimated weighted average diluted shares outstanding of 27.3 million.

As previously announced, the Company has initiated Project Refuel, which upon the divestiture of the Nutritional Supplements segment, is now targeting annualized profit improvement of approximately $8.0 million over the duration of the plan. The plan is estimated to be completed by the first quarter of fiscal 2020, and the Company expects to incur total cumulative restructuring charges in the range of $3.2 to $4.8 million over the same period.

The Company now expects a reported GAAP effective tax rate range of 10.4% to 10.9% for continuing operations, and an adjusted effective tax rate range of 6.8% to 7.2% for continuing operations for the full fiscal year 2018. The outlook does not include the potential one-time impact from recently enacted tax legislation that cannot be reasonably estimated at this time. Please refer to the schedule entitled "Effective Income Tax Rate (GAAP) and Adjusted Effective Income Tax Rate (Non-GAAP)" in the accompanying tables to this press release.

The likelihood and potential impact of any fiscal 2018 acquisitions and divestitures, future asset impairment charges, future foreign currency fluctuations, or further share repurchases are unknown and cannot be reasonably estimated; therefore, they are not included in the Company's sales and earnings outlook.

Conference Call and Webcast

The Company will conduct a teleconference in conjunction with today's earnings release. The teleconference begins at 9:00 a.m. Eastern Time today, Monday, January 8, 2018. Investors and analysts interested in participating in the call are invited to dial (888) 394-8218 approximately ten minutes prior to the start of the call. The conference call will also be webcast live at: http://investor.hotus.com/. A telephone replay of this call will be available at 12:00 p.m. Eastern Time on January 8, 2018 until 11:59 p.m. Eastern Time on January 15, 2018 and can be accessed by dialing (844) 512-2921 and entering replay pin number 1227500. A replay of the webcast will remain available on the website for 60 days.

Non-GAAP Financial Measures

The Company reports and discusses its operating results using financial measures consistent with accounting principles generally accepted in the United States of America ("GAAP"). To supplement its presentation, the Company discloses certain financial measures that may be considered non-GAAP financial measures, such as Leadership Brand net sales, adjusted operating income, adjusted operating margin, adjusted effective tax rate, adjusted income, adjusted diluted earnings per share, EBITDA and adjusted EBITDA, which are presented in accompanying tables to this press release along with a reconciliation of these financial measures to their corresponding GAAP-based measures presented in the Company's consolidated statements of operations. All references to our continuing operations exclude the Nutritional Supplements segment.

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About Helen of Troy Limited

Helen of Troy Limited (NASDAQ, NM: HELE) is a leading global consumer products company offering creative solutions for its customers through a strong portfolio of well-recognized and widely-trusted brands, including OXO®, Hydro Flask®, Vicks®, Braun®, Honeywell®, PUR®, Febreze®, Revlon®, Pro Beauty Tools®, Sure®, Pert®, Infusium23®, Brut®, Ammens®, Hot Tools®, and Bed Head®. All trademarks herein belong to Helen of Troy Limited (or its affiliates) and/or are used under license from their respective licensors.

For more information about Helen of Troy, please visit http://investor.hotus.com/

Forward Looking Statements

Certain written and oral statements made by our Company and subsidiaries of our Company may constitute "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. This includes statements made in this press release. Generally, the words "anticipates", "believes", "expects", "plans", "may", "will", "should", "seeks", "estimates", "project", "predict", "potential", "continue", "intends", and other similar words identify forward-looking statements. All statements that address operating results, events or developments that we expect or anticipate will occur in the future, including statements related to sales, earnings per share results, and statements expressing general expectations about future operating results, are forward-looking statements and are based upon our current expectations and various assumptions. We believe there is a reasonable basis for our expectations and assumptions, but there can be no assurance that we will realize our expectations or that our assumptions will prove correct. Forward-looking statements are subject to risks that could cause them to differ materially from actual results. Accordingly, we caution readers not to place undue reliance on forward-looking statements. The forward-looking statements contained in this press release should be read in conjunction with, and are subject to and qualified by, the risks described in the Company's Form 10-K for the year ended February 28, 2017 and in our other filings with the SEC. Investors are urged to refer to the risk factors referred to above for a description of these risks. Such risks include, among others, our ability to deliver products to our customers in a timely manner and according to their fulfillment standards, the costs of complying with the business demands and requirements of large sophisticated customers, our relationships with key customers and licensors, our dependence on the strength of retail economies and vulnerabilities to any prolonged economic downturn, our dependence on sales to several large customers and the risks associated with any loss or substantial decline in sales to top customers, expectations regarding any proposed restructurings, our recent and future acquisitions or divestitures, including our ability to realize anticipated cost savings, synergies and other benefits along with our ability to effectively integrate acquired businesses or separate divested businesses, circumstances which may contribute to future impairment of goodwill, intangible or other long-lived assets, the retention and recruitment of key personnel, foreign currency exchange rate fluctuations, disruptions in U.S., U.K., Euro zone, and other international credit markets, risks associated with weather conditions, the duration and severity of the cold and flu season and other related factors, our dependence on foreign sources of supply and foreign manufacturing, and associated operational risks including, but not limited to, long lead times, consistent local labor availability and capacity, and timely availability of sufficient shipping carrier capacity, labor and energy on cost of goods sold and certain operating expenses, the geographic concentration and peak season capacity of certain U.S. distribution facilities increases our exposure to significant shipping disruptions and added shipping and storage costs, our projections of product demand, sales and net income are highly subjective in nature and future sales and net income could vary in a material amount from such projections, the risks associated with the use of trademarks licensed from and to third parties, our ability to develop and introduce a continuing stream of new products to meet changing consumer preferences, trade barriers, exchange controls, expropriations, and other risks associated with U.S. and foreign operations, the risks to our liquidity as a result of changes to capital market conditions and other constraints or events that impose constraints on our cash resources and ability to operate our business, the costs, complexity and challenges of upgrading and managing our global information systems, the risks associated with information security breaches, the risks associated with product recalls, product liability, other claims, and related litigation against us, the risks associated with accounting for tax positions, tax audits and related disputes with taxing authorities, the risks of potential changes in laws in the U.S. or abroad, including tax laws, regulations or treaties, employment and health insurance laws and regulations, and laws relating to environmental policy, financial regulation, transportation policy and infrastructure policy along with the costs and complexities of compliance with such laws, and our ability to continue to avoid classification as a controlled foreign corporation. We undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.

HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Statements of Operations

(Unaudited)

(in thousands, except per share data)

         
Three Months Ended November 30,
2017 2016
Sales revenue, net $ 453,045 100.0 % $ 444,414 100.0 %
Cost of goods sold   251,271 55.5 %   250,199 56.3 %
Gross profit 201,774 44.5 % 194,215 43.7 %
 
Selling, general, and administrative expense ("SG&A") 133,894 29.6 % 130,896 29.5 %
Asset impairment charges 82,227 18.1 % - - %
Restructuring charges(4)   1,283 0.3 %   - - %
Operating income (loss)   (15,630) (3.4) %   63,319 14.2 %
 
Nonoperating income, net 34 - % 106 - %
Interest expense   (3,619) (0.8) %   (3,625) (0.8) %
Income (loss) before income taxes (19,215) (4.2) % 59,800 13.5 %
 
Income tax expense   11,221 2.5 %   2,188 0.5 %
Net income (loss) $ (30,436) (6.7) % $ 57,612 13.0 %
 
Diluted earnings (loss) per share $ (1.12) $ 2.07
 
Weighted average shares of common stock used in computing
diluted earnings (loss) per share
27,113 27,802
 
 
Nine Months Ended November 30,
2017 2016
Sales revenue, net $ 1,191,112 100.0 % $ 1,160,522 100.0 %
Cost of goods sold   664,956 55.8 %   650,912 56.1 %
Gross profit 526,156 44.2 % 509,610 43.9 %
 
Selling, general, and administrative expense ("SG&A") 387,332 32.5 % 378,506 32.6 %
Asset impairment charges 136,297 11.4 % 7,400 0.6 %
Restructuring charges(4)   1,283 0.1 %   - - %
Operating income   1,244 0.1 %   123,704 10.7 %
 
Nonoperating income, net 281 - % 343 - %
Interest expense   (11,327) (1.0) %   (11,142) (1.0) %
Income (loss) before income taxes (9,802) (0.8) % 112,905 9.7 %
 
Income tax expense   5,833 0.5 %   7,912 0.7 %
Net income (loss) $ (15,635) (1.3) % $ 104,993 9.0 %
 
Diluted earnings (loss) per share $ (0.58) $ 3.74
 
Weighted average shares of common stock used in computing
diluted earnings (loss) per share
27,140 28,058
 

HELEN OF TROY LIMITED AND SUBSIDIARIES

Net Sales Revenue by Segment

(Unaudited)

(in thousands)

           
Three Months Ended November 30, % of Sales Revenue, net
2017 2016 $ Change % Change   2017   2016
Sales revenue by segment, net
Housewares $ 128,017 $ 124,723 $ 3,294 2.6 % 28.3 % 28.1 %
Health & Home 190,975 179,842 11,133 6.2 % 42.2 % 40.5 %
Nutritional Supplements 29,336 32,163 (2,827) (8.8) % 6.5 % 7.2 %
Beauty   104,717   107,686   (2,969) (2.8) % 23.1 % 24.2 %
Total sales revenue, net $ 453,045 $ 444,414 $ 8,631 1.9 % 100.0 % 100.0 %
 
 
Nine Months Ended November 30, % of Sales Revenue, net
2017(3) 2016 $ Change % Change   2017   2016
Sales revenue by segment, net
Housewares $ 341,165 $ 315,302 $ 25,863 8.2 % 28.6 % 27.2 %
Health & Home 489,102 470,650 18,452 3.9 % 41.1 % 40.6 %
Nutritional Supplements 92,212 101,215 (9,003) (8.9) % 7.7 % 8.7 %
Beauty   268,633   273,355   (4,722) (1.7) % 22.6 % 23.6 %
Total sales revenue, net $ 1,191,112 $ 1,160,522 $ 30,590 2.6 % 100.0 % 100.0 %
 

HELEN OF TROY LIMITED AND SUBSIDIARIES

Leadership Brand Net Sales Revenue(1)

(Unaudited)

(in thousands)

       
Three Months Ended November 30,     Nine Months Ended November 30,
2017 2016 2017 2016
Leadership Brand sales revenue, net(2) $ 329,884 $ 310,121 $ 843,169 $ 785,788
All other sales revenue, net   123,161   134,293   347,943   374,734
Total sales revenue, net $ 453,045 $ 444,414 $ 1,191,112 $ 1,160,522
 

HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated and Segment Net Sales, Operating Margin and Adjusted Operating Margin (non-GAAP)(1)

(Unaudited)

(in thousands)

 
Three Months Ended November 30,
  Housewares   Health & Home  

Nutritional

Supplements

  Beauty   Total
Fiscal 2017 sales revenue, net $ 124,723 $ 179,842 $ 32,163 $ 107,686 $ 444,414
Core business 3,074 9,323 (2,827) (3,731) 5,839
Impact of foreign currency   220   1,810   -   762   2,792
Change in sales revenue, net   3,294   11,133   (2,827)   (2,969)   8,631
Fiscal 2018 sales revenue, net $ 128,017 $ 190,975 $ 29,336 $ 104,717 $ 453,045
 
Total net sales revenue growth 2.6 % 6.2 % (8.8) % (2.8) % 1.9 %
Core business 2.5 % 5.2 % (8.8) % (3.5) % 1.3 %
Impact of foreign currency 0.2 % 1.0 % - % 0.7 % 0.6 %
 
Operating margin (GAAP)
Third quarter fiscal 2018 23.4 % 14.6 % (284.7) % 9.6 % (3.4) %
Third quarter fiscal 2017 23.4 % 11.2 % (0.2) % 13.0 % 14.2 %
Adjusted operating margin (non-GAAP)
Third quarter fiscal 2018 25.0 % 16.9 % 3.6 % 13.0 % 17.4 %
Third quarter fiscal 2017 24.5 % 13.7 % 5.8 % 15.3 % 16.5 %
 
 
Nine Months Ended November 30,
  Housewares   Health & Home  

Nutritional

Supplements

  Beauty   Total
Fiscal 2017 sales revenue, net $ 315,302 $ 470,650 $ 101,215 $ 273,355 $ 1,160,522
Core business 20,043 17,364 (9,003) (5,025) 23,379
Impact of foreign currency (328) 1,088 - 303 1,063
Acquisitions(3)   6,148   -   -   -   6,148
Change in sales revenue, net   25,863   18,452   (9,003)   (4,722)   30,590
Fiscal 2018 sales revenue, net $ 341,165 $ 489,102 $ 92,212 $ 268,633 $ 1,191,112
 
Total net sales revenue growth 8.2 % 3.9 % (8.9) % (1.7) % 2.6 %
Core business 6.4 % 3.7 % (8.9) % (1.8) % 2.0 %
Impact of foreign currency (0.1) % 0.2 % - % 0.1 % 0.1 %
Acquisitions 1.9 % - % - % - % 0.5 %
 
Operating Margin (GAAP)
Year-to-Date Fiscal 2018 21.0 % 10.3 % (150.1) % 6.7 % 0.1 %
Year-to-Date Fiscal 2017 21.9 % 8.3 % (6.5) % 8.1 % 10.7 %
Adjusted Operating Margin (non-GAAP)
Year-to-Date Fiscal 2018 22.8 % 13.3 % 0.4 % 11.2 % 14.5 %
Year-to-Date Fiscal 2017 23.3 % 11.7 % 4.8 % 11.9 % 14.3 %
 

HELEN OF TROY LIMITED AND SUBSIDIARIES

Selected Consolidated Balance Sheet, Cash Flow and Liquidity Information

(Unaudited)

(in thousands)

   
November 30,
2017 2016
Balance Sheet:
Cash and cash equivalents $ 21,157 $ 16,780
Receivables, net 302,390 289,943
Inventory, net 285,594 301,088
Total assets, current 622,646 620,062
Total assets 1,774,895 1,889,077
Total liabilities, current 359,126 327,503
Total long-term liabilities 431,359 581,696
Total debt 426,191 564,902
Stockholders' equity 984,410 979,878
 
Liquidity:
Working capital $ 263,520 $ 292,559
 
Nine Months Ended November 30,
2017 2016
Cash Flow:
Depreciation and amortization $ 32,362 $ 33,323
Net cash provided by operating activities 107,629 139,140
Capital and intangible asset expenditures 19,854 14,989
Payments to acquire businesses, net of cash received - 209,258
Net debt repayments 60,400 55,800
Payments for repurchases of common stock 29,158 75,000
 

SELECTED OTHER DATA

Reconciliation of Non-GAAP Financial Measures – GAAP Operating Income (Loss)

to Adjusted Operating Income (non-GAAP)(1)

(Unaudited)

(in thousands)

 
Three Months Ended November 30, 2017
Housewares   Health & Home Nutritional

Supplements

  Beauty Total
Operating income (loss), as reported GAAP) $ 29,982   23.4 % $ 27,897   14.6 % $ (83,521)   (284.7) % $ 10,012 9.6 % $ (15,630)   (3.4) %
Asset impairment charges - - % - - % 82,227 280.3 % - - % 82,227 18.1 %
Restructuring charges(4)   - - %   - - %   118 0.4 %   1,165 1.1 %   1,283 0.3 %
Subtotal 29,982 23.4 % 27,897 14.6 % (1,176) (4.0) % 11,177 10.7 % 67,880 15.0 %
Amortization of intangible assets 489 0.4 % 2,797 1.5 % 1,770 6.0 % 1,374 1.3 % 6,430 1.4 %
Non-cash share-based compensation   1,527 1.2 %   1,632 0.9 %   467 1.6 %   1,025 1.0 %   4,651 1.0 %
Adjusted operating income (non-GAAP) $ 31,998 25.0 % $ 32,326 16.9 % $ 1,061 3.6 % $ 13,576 13.0 % $ 78,961 17.4 %
 
Three Months Ended November 30, 2016
Housewares Health & Home Nutritional
Supplements
Beauty Total
Operating income (loss), as reported (GAAP) $ 29,223 23.4 % $ 20,155 11.2 % $ (80) (0.2) % $ 14,021 13.0 % $ 63,319 14.2 %
Amortization of intangible assets 658 0.5 % 3,546 2.0 % 1,571 4.9 % 1,424 1.3 % 7,199 1.6 %
Non-cash share-based compensation   671 0.5 %   872 0.5 %   369 1.1 %   991 0.9 %   2,903 0.7 %
Adjusted operating income (non-GAAP) $ 30,552 24.5 % $ 24,573 13.7 % $ 1,860 5.8 % $ 16,436 15.3 % $ 73,421 16.5 %
 
Nine Months Ended November 30, 2017
Housewares(3) Health & Home Nutritional
Supplements
Beauty Total
Operating income (loss), as reported (GAAP) $ 71,601 21.0 % $ 50,187 10.3 % $ (138,413) (150.1) % $ 17,869 6.7 % $ 1,244 0.1 %
Asset impairment charges - - % - - % 132,297 143.5 % 4,000 1.5 % 136,297 11.4 %
Restructuring charges(4) - - % - - % 118 0.4 % 1,165 1.1 % 1,283 0.3 %
TRU bankruptcy charge   956 0.3 %   2,640 0.5 %   - - %   - - %   3,596 0.3 %
Subtotal 72,557 21.3 % 52,827 10.8 % (5,998) (6.5) % 23,034 8.6 % 142,420 12.0 %
Amortization of intangible assets 1,618 0.5 % 8,373 1.7 % 5,380 5.8 % 4,207 1.6 % 19,578 1.6 %
Non-cash share-based compensation   3,579 1.0 %   3,792 0.8 %   980 1.1 %   2,779 1.0 %   11,130 0.9 %
Adjusted operating income (non-GAAP) $ 77,754 22.8 % $ 64,992 13.3 % $ 362 0.4 % $ 30,020 11.2 % $ 173,128 14.5 %
   
Nine Months Ended November 30, 2016
Housewares Health & Home   Nutritional

Supplements

  Beauty   Total  
Operating income (loss), as reported GAAP) $ 68,956 21.9 % $ 39,156 8.3 % $ (6,581) (6.5) % $ 22,173 8.1 % $ 123,704 10.7 %
Asset impairment charges - - % - - % 5,000 4.9 % 2,400 0.9 % 7,400 0.6 %
Patent litigation charge   - - %   1,468 0.3 %   - - %   - - %   1,468 0.1 %
Subtotal 68,956 21.9 % 40,624 8.6 % (1,581) (1.6) % 24,573 9.0 % 132,572 11.4 %
Amortization of intangible assets 1,986 0.6 % 10,626 2.3 % 4,713 4.7 % 4,300 1.6 % 21,625 1.9 %
Non-cash share-based compensation   2,404 0.8 %   3,787 0.8 %   1,734 1.7 %   3,736 1.4 %   11,661 1.0 %
Adjusted operating income (non-GAAP) $ 73,346 23.3 % $ 55,037 11.7 % $ 4,866 4.8 % $ 32,609 11.9 % $ 165,858 14.3 %
 

SELECTED OTHER DATA

Reconciliation of Non-GAAP Financial Measures - EBITDA

(Earnings (Loss) Before Interest, Taxes, Depreciation and Amortization) and Adjusted EBITDA(1)

(Unaudited)

(in thousands)

       
Three Months Ended November 30, Nine Months Ended November 30,
2017 2016 2017 2016
Net income (loss), as reported (GAAP) $ (30,436) $ 57,612 $ (15,635) $ 104,993
 
Interest expense, net 3,604 3,604 11,221 11,052
 
Income tax expense 11,221 2,188 5,833 7,912
 
Depreciation and amortization, excluding amortized interest   10,760   11,225   32,362   33,323
 
EBITDA (non-GAAP) (4,851) 74,629 33,781 157,280
 
Add: Non-cash asset impairment charges 82,227 - 136,297 7,400
 
Restructuring charges(4) 1,283 - 1,283 -
 
TRU bankruptcy charge - - 3,596 -
 
Patent litigation charge - - - 1,468
 
Non-cash share-based compensation   4,651   2,903   11,130   11,661
 
Adjusted EBITDA (non-GAAP) $ 83,310 $ 77,532 $ 186,087 $ 177,809
 

SELECTED OTHER DATA

Reconciliation of Non-GAAP Financial Measures - EBITDA

(Earnings (Loss) Before Interest, Taxes, Depreciation and Amortization) and Adjusted EBITDA by Segment(1)

(Unaudited)

(in thousands)

         
Three Months Ended November 30, 2017
Housewares Health & Home

Nutritional

Supplements

Beauty Total
Operating income (loss), as reported (GAAP) $ 29,982 $ 27,897 $ (83,521) $ 10,012 $ (15,630)
Depreciation and amortization, excluding amortized interest 1,444 4,232 2,374 2,710 10,760
Nonoperating income, net   -   -   -   19   19
EBITDA (non-GAAP) 31,426 32,129 (81,147) 12,741 (4,851)
Add: Non-cash asset impairment charges - - 82,227 - 82,227
Restructuring charges(4) - - 118 1,165 1,283
Non-cash share-based compensation   1,527   1,632   467   1,025   4,651
Adjusted EBITDA (non-GAAP) $ 32,953 $ 33,761 $ 1,665 $ 14,931 $ 83,310
 
Three Months Ended November 30, 2016
Housewares Health & Home

Nutritional

Supplements

Beauty Total
Operating income (loss), as reported (GAAP) $ 29,223 $ 20,155 $ (80) $ 14,021 $ 63,319
Depreciation and amortization, excluding amortized interest 1,429 5,221 2,108 2,467 11,225
Nonoperating income, net   -   -   -   85   85
EBITDA (non-GAAP) 30,652 25,376 2,028 16,573 74,629
Add: Non-cash share-based compensation   671   872   369   991   2,903
Adjusted EBITDA (non-GAAP) $ 31,323 $ 26,248 $ 2,397 $ 17,564 $ 77,532
 
         
Nine Months Ended November 30, 2017
Housewares Health & Home

Nutritional

Supplements

Beauty Total
Operating income (loss), as reported (GAAP) $ 71,601 $ 50,187 $ (138,413) $ 17,869 $ 1,244
Depreciation and amortization, excluding amortized interest 4,290 12,553 7,223 8,296 32,362
Nonoperating income, net   -   -   -   175   175
EBITDA (non-GAAP) 75,891 62,740 (131,190) 26,340 33,781
Add: Non-cash asset impairment charges - - 132,297 4,000 136,297
Restructuring charges(4) - - 118 1,165 1,283
TRU bankruptcy charge 956 2,640 - - 3,596
Non-cash asset share-based compensation   3,579   3,792   980   2,779   11,130
Adjusted EBITDA (non-GAAP) $ 80,426 $ 69,172 $ 2,205 $ 34,284 $ 186,087
 
Nine Months Ended November 30, 2016
Housewares Health & Home

Nutritional

Supplements

Beauty Total
Operating income (loss), as reported (GAAP) $ 68,956 $ 39,156 $ (6,581) $ 22,173 $ 123,704
Depreciation and amortization, excluding amortized interest 4,200 15,738 6,242 7,143 33,323
Nonoperating income, net   -   -   -   253   253
EBITDA (non-GAAP) 73,156 54,894 (339) 29,569 157,280
Add: Non-cash asset impairment charges - - 5,000 2,400 7,400
Patent litigation charge - 1,468 - - 1,468
Non-cash asset share-based compensation   2,404   3,787   1,734   3,736   11,661
Adjusted EBITDA (non-GAAP) $ 75,560 $ 60,149 $ 6,395 $ 35,705 $ 177,809
 

SELECTED OTHER DATA

Effective Tax Rate (GAAP) and Adjusted Effective Tax Rate (Non-GAAP)(1)

(Unaudited)

           
Nine Discontinued Continuing
Months Outlook for the Operations Operations
Ended Balance of Outlook Outlook Outlook
November 30, the Fiscal Year for Fiscal Year for Fiscal Year for Fiscal Year
2017 (Three Months) 2018 2018 2018
Effective tax rate, as reported (GAAP) (59.5) % (78.6) % - (76.6) % (83.0) % - (82.5) % 40.0 % - 40.0 % 10.4 % - 10.9 %
 
Impact of divestiture 0.0 % (32.4) % - (32.4) % (42.5) % - (42.5) % 0.0 % - 0.0 % (4.3) % - (4.3) %
 
Asset impairment charges 64.1 % 118.2 % - 118.2 % 130.8 % - 130.8 % (0.6) % - (0.6) % 0.1 % - 0.1 %
 
Restructuring charges 0.0 % 0.0 % - 0.0 % 0.0 % - 0.0 % 0.0 % - 0.0 % 0.0 % - 0.0 %
 
TRU Bankruptcy charge 0.0 % 0.0 % - 0.0 % 0.0 % - 0.0 % 0.0 % - 0.0 % 0.0 % - 0.0 %
                 
Subtotal 4.7 % 7.1 % - 9.1 % 5.3 % - 5.8 % 39.4 % - 39.4 % 6.2 % - 6.7 %
 
Amortization of intangible assets 1.1 % 0.8 % - 0.8 % 1.0 % - 1.0 % 1.1 % - 1.1 % (0.1) % - (0.1) %
 
Non-cash share based compensation 0.7 % 0.5 % - 0.5 % 0.7 % - 0.7 % 0.0 % - 0.0 % 0.7 % - 0.7 %
                 
Adjusted effective tax rate 6.5 % 8.4 % - 10.4 % 7.0 % - 7.5 % 40.5 % - 40.5 % 6.8 % - 7.2 %
 

HELEN OF TROY LIMITED AND SUBSIDIARIES

Reconciliation of GAAP Net Income and Earnings (Loss) Per Share to Adjusted Income and Adjusted Earnings Per Share (non-GAAP)(1)

(Unaudited)

(dollars in thousands, except per share data)

                                     
  Three Months Ended November 30, 2017
  Income (Loss)   Diluted Earnings (Loss) Per Share
(in thousands, except per share data) Before Tax   Tax   Net of Tax Before Tax   Tax   Net of Tax
As reported (GAAP) $ (19,215) $ 11,221 $ (30,436) $ (0.71) $ 0.41 $ (1.12)
 
Asset impairment charges 82,227 (6,380) 88,607 3.02 (0.23) 3.25
Restructuring charges(4) 1,283 69 1,214 0.05 - 0.04
Subtotal 64,295 4,910 59,385 2.36 0.18 2.18
Amortization of intangible assets 6,430 853 5,577 0.24 0.03 0.20
Non-cash share-based compensation   4,651   781   3,870   0.17   0.03   0.14
Adjusted (non-GAAP) $ 75,376 $ 6,544 $ 68,832 $ 2.76 $ 0.24 $ 2.52
 
Weighted average shares of common stock used in computing diluted earnings (loss) per share, as reported 27,113
Weighted average shares of common stock used in computing adjusted diluted earnings per share (non-GAAP)                 27,267
 
 
  Three Months Ended November 30, 2016
  Income   Diluted Earnings Per Share
(in thousands, except per share data) Before Tax   Tax   Net of Tax Before Tax   Tax   Net of Tax
As reported (GAAP) $ 59,800 $ 2,188 $ 57,612 $ 2.15 $ 0.08 $ 2.07
 
Amortization of intangible assets 7,199 1,009 6,190 0.26 0.04 0.22
Non-cash share-based compensation   2,903   706   2,197   0.10   0.02   0.08
Adjusted (non-GAAP) $ 69,902 $ 3,903 $ 65,999 $ 2.51 $ 0.14 $ 2.37
 
Weighted average shares of common stock used in computing diluted earnings per share, as reported 27,802
Weighted average shares of common stock used in computing adjusted diluted earnings per share (non-GAAP)               27,802
 
                                     
  Nine Months Ended November 30, 2017
  Income (Loss)   Diluted Earnings (Loss) Per Share
(in thousands, except per share data) Before Tax   Tax   Net of Tax Before Tax   Tax   Net of Tax
As reported (GAAP) $ (9,802) $ 5,833 $ (15,635) $ (0.36) $ 0.21 $ (0.58)
 
Asset impairment charges 136,297 3 136,294 4.99 - 4.99
Restructuring charges(4) 1,283 69 1,214 0.05 - 0.04
TRU bankruptcy charge   3,596   204   3,392   0.13   0.01 0.12
Subtotal 131,374 6,109 125,265 4.81 0.22 4.59
Amortization of intangible assets 19,578 2,625 16,953 0.72 0.10 0.62
Non-cash share-based compensation   11,130   1,862   9,268   0.41   0.07   0.34
Adjusted (non-GAAP) $ 162,082 $ 10,596 $ 151,486 $ 5.94 $ 0.39 $ 5.55
 
Weighted average shares of common stock used in computing diluted earnings (loss) per share, as reported 27,140
Weighted average shares of common stock used in computing adjusted diluted earnings per share (non-GAAP)                 27,304
 
                                     
  Nine Months Ended November 30, 2016
  Income   Diluted Earnings Per Share
(in thousands, except per share data) Before Tax   Tax   Net of Tax Before Tax   Tax   Net of Tax
As reported (GAAP) $ 112,905 $ 7,912 $ 104,993 $ 4.02 $ 0.28 $ 3.74
 
Asset impairment charges 7,400 2,303 5,097 0.26 0.08 0.18
Patent litigation charge   1,468   4   1,464   0.05   -   0.05
Subtotal 121,773 10,219 111,554 4.34 0.36 3.98
Amortization of intangible assets 21,625 3,005 18,620 0.77 0.11 0.66
Non-cash share-based compensation   11,661   2,920   8,741   0.42   0.11   0.31
Adjusted (non-GAAP) $ 155,059 $ 16,144 $ 138,915 $ 5.53 $ 0.58 $ 4.95
 
Weighted average shares of common stock used in computing diluted earnings per share, as reported 28,058
Weighted average shares of common stock used in computing adjusted diluted earnings per share (non-GAAP)                 28,058
 

HELEN OF TROY LIMITED AND SUBSIDIARIES

Reconciliation of Fiscal Year 2018 Outlook for GAAP Diluted Earnings (Loss) Per Share

to Adjusted Diluted Earnings Per Share (non-GAAP) (1)

(Unaudited)

         
Fiscal Year Ended February 28, 2018

Nine Months

Ended

November 30,

Outlook for the
Balance of the
Fiscal Year
(Three Months)
Outlook for the
Fiscal Year
(Twelve Months)

Discontinued

Operations

Continuing

Operations

Diluted earnings (loss) per share, as reported (GAAP) $ (0.58) $ 2.93 - $ 3.19 $ 2.35 - $ 2.61 $ (3.07) - $ (3.02) $ 5.42 - $ 5.63
Asset impairment charges, net of tax 4.99 (1.93) - (1.93) 3.06 - 3.06 2.93 - 2.93 0.13 - 0.13
Restructuring charges, net of tax(4) 0.04 0.0 - 0.0 0.04 - 0.04 0.0 - 0.0 0.04 - 0.04
TRU bankruptcy charge, net of tax   0.12   0.0 -   0.0   0.12 -   0.12   0.0 -   0.0   0.12 -   0.12
Subtotal 4.59 1.00 - 1.26 5.59 - 5.85 (0.14) - (0.09) 5.73 - 5.94
Amortization of intangible assets, net of tax 0.62 0.20 - 0.21 0.82 - 0.83 0.14 - 0.14 0.68 - 0.69
Non-cash share-based compensation, net of tax   0.34   0.10 -   0.13   0.44 -   0.47   0.0 -   0.0   0.44 -   0.47
Adjusted diluted earnings per share (non-GAAP) $ 5.55 $ 1.30 - $ 1.60 $ 6.85 - $ 7.15 $ 0.0 - $ 0.05 $ 6.85 - $ 7.10
 

HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Statements of Income, and Reconciliation of Non-GAAP Financial Measures – Adjusted Operating Income, Adjusted Diluted Earnings (Loss) Per Share(1)

(Unaudited)

(in thousands, except per share data)

                 
Three Months Ended November 30,
2017 2016
As Reported Adjusted As Reported Adjusted
(GAAP)   Adjustments (Non-GAAP) (GAAP)     Adjustments (Non-GAAP)
 
Sales revenue, net $ 453,045 100.0 % $ - $ 453,045 100.0 % $ 444,414 100.0 % $ - $ 444,414 100.0 %
Cost of goods sold   251,271 55.5 %   -   251,271 55.5 %   250,199 56.3 %   -     250,199 56.3 %
Gross profit 201,774 44.5 % - 201,774 44.5 % 194,215 43.7 % - 194,215 43.7 %
 
SG&A 133,894 29.6 % (6,430) (5) 122,813 27.1 % 130,896 29.5 % (7,199) (5) 120,794 27.2 %
(4,651) (6) (2,903) (6)
Asset impairment charges 82,227 18.1 % (82,227) - - % - - % - - - %
Restructuring charges   1,283 0.3 %   (1,283) (4)   - - %   - - %   -     - - %
Operating income (Loss)   (15,630) (3.4) %   94,591   78,961 17.4 %   63,319 14.2 %   10,102     73,421 16.5 %
 
Nonoperating income, net 34 - % - 34 0.0 % 106 - % - 106 - %
Interest expense   (3,619) (0.8) %   -   (3,619) (0.8) %   (3,625) (0.8) %   -     (3,625) (0.8) %
Income (loss) before income taxes (19,215) (4.2) % 94,591 75,376 16.6 % 59,800 13.5 % 10,102 69,902 15.7 %
 
Income tax expense   11,221 2.5 %   (4,677)   6,544 1.4 %   2,188 0.5 %   1,715     3,903 0.9 %
Net income (loss) $ (30,436) (6.7) % $ 99,268 $ 68,832 15.2 % $ 57,612 13.0 % $ 8,387   $ 65,999 14.9 %
 
Diluted earnings (loss) per share $ (1.12) $ 3.64 $ 2.52 $ 2.07 $ 0.30 $ 2.37
 
Weighted average shares of common
stock used in computing diluted
earnings (loss) per share
27,113 27,267 27,802 27,802
 
 
Nine Months Ended November 30,
2017 2016
As Reported Adjusted As Reported Adjusted
(GAAP)   Adjustments (Non-GAAP) (GAAP)     Adjustments (Non-GAAP)
Sales revenue, net $ 1,191,112 100.0 % $ - $ 1,191,112 100.0 % $ 1,160,522 100.0 % $ - $ 1,160,522 100.0 %
Cost of goods sold   664,956 55.8 %   -   664,956 55.8 %   650,912 56.1 %   -   650,912 56.1 %
Gross profit 526,156 44.2 % - 526,156 44.2 % 509,610 43.9 % - 509,610 43.9 %
SG&A 387,332 32.5 % (3,596) (7) 353,028 29.6 % 378,506 32.6 % (1,468) (8) 343,752 29.6 %
(19,578) (5) (21,625) (5)
(11,130) (6) (11,661) (6)
Asset impairment charges 136,297 11.4 % (136,297) - - % 7,400 0.6 % (7,400) - - %
Restructuring charges   1,283 0.1 %   (1,283) (4)   - - %   - - %   -   - - %
Operating income   1,244 0.1 %   171,884   173,128 14.5 %   123,704 10.7 %   42,154   165,858 14.3 %
 
Nonoperating income, net 281 - % - 281 - % 343 - % - 343 - %
Interest expense   (11,327) (1.0) %   -   (11,327) (1.0) %   (11,142) (1.0) %   -   (11,142) (1.0) %
Income (loss) before income taxes (9,802) (0.8) % 171,884 162,082 13.6 % 112,905 9.7 % 42,154 155,059 13.4 %
 
Income tax expense   5,833 0.5 %   4,763   10,596 0.9 %   7,912 0.7 %   8,232   16,144 1.4 %
Net income (loss) $ (15,635) (1.3) % $ 167,121 $ 151,486 12.7 % $ 104,993 9.0 % $ 33,922 $ 138,915 12.0 %
 
Diluted earnings (loss) per share $ (0.58) $ 6.13 $ 5.55 $ 3.74 $ 1.21 $ 4.95
 
Weighted average shares of common
stock used in computing diluted
earnings (loss) per share
27,140 27,304 28,058 28,058
 

HELEN OF TROY LIMITED AND SUBSIDIARIES

Notes to Press Release

(1) This press release contains non-GAAP financial measures. Leadership Brand net sales revenue, adjusted operating income, adjusted operating margin, adjusted effective tax rate, adjusted income, adjusted diluted earnings per share, EBITDA, and adjusted EBITDA ("Non-GAAP measures") that are discussed in the accompanying press release or in the preceding tables may be considered non-GAAP financial information as contemplated by SEC Regulation G, Rule 100. Accordingly, we are providing the preceding tables that reconcile these measures to their corresponding GAAP-based measures presented in our Consolidated Condensed Statements of Operations in the accompanying tables to the press release. The Company believes that these non-GAAP measures provide useful information to management and investors regarding financial and business trends relating to its financial condition and results of operations. We believe that these non-GAAP financial measures, in combination with the Company's financial results calculated in accordance with GAAP, provide investors with additional perspective regarding the impact of such charges on net income and earnings per share. We also believe that these non-GAAP measures facilitate a more direct comparison of the Company's performance with its competitors. We further believe that including the excluded charges would not accurately reflect the underlying performance of the Company's continuing operations for the period in which the charges are incurred, even though such charges may be incurred and reflected in the Company's GAAP financial results in the near future. Additionally, the non-GAAP financial measures are used by management for measuring and evaluating the Company's performance. The Company further believes that the items excluded from certain non-GAAP measures do not accurately reflect the underlying performance of its continuing operations for the periods in which they are incurred, even though some of these excluded items may be incurred and reflected in the Company's GAAP financial results in the foreseeable future. The material limitation associated with the use of the non-GAAP financial measures is that the non-GAAP measures do not reflect the full economic impact of the Company's activities. These non-GAAP measures are not prepared in accordance with GAAP, are not an alternative to GAAP financial information, and may be calculated differently than non-GAAP financial information disclosed by other companies. Accordingly, undue reliance should not be placed on non-GAAP information.

(2) Leadership Brand net sales consists of revenue from the OXO, Honeywell, Braun, PUR, Hydro Flask, Vicks, and Hot Tools brands.

(3) The Housewares segment includes approximately one-half month of incremental operating results from Hydro Flask, which was acquired on March 18, 2016.

(4) Charges incurred in conjunction with the Company's restructuring plan (Project Refuel) for the three- and nine-months ended November 30, 2017, with no comparable charges in the same periods last year.

(5) Amortization of intangible assets.

(6) Non-cash share-based compensation.

(7) Charge related to the bankruptcy of Toys "R" Us, Inc. (TRU).

(8) Patent litigation charge.

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