Helen Of Troy Limited · NASDAQ:HELE
Helen Of Troy — Investor Presentation (January 2020)
60 slides from Helen Of Troy's investor presentation, January 2020
Slide 1: Investor Presentation January 2020
Invest in Leadership Brands Optimize Double Capital Down on Deployment International Maximize Selective Investor Presentation Operating Efficiency & Strategic M&A January 2020 Accelerate Consumer Shared Service Centric Excellence Unify & Elevate the Best People
Slide 2: Forward Looking Statements and Reconciliation of Non-GAAP Financial Measures
Forward Looking Statements and Reconciliation of Non-GAAP Financial Measures Forward Looking Statements: and challenges of upgrading and managing its global information systems, the risks associated with cybersecurity and Certain written and oral statements made by the Company and subsidiaries of th
Slide 3: HELE Business Overview
HELE Business Overview Highly Favorable Business Fundamentals A leading global consumer products company offering creative solutions for its customers Powerful Global Brands through a strong diversified portfolio of well- recognized and widely-trusted brands in Health Exciting Growth Drivers & Home,
Slide 4: We Believe We Have Strengths and Qualities That Set Us Apart
We Believe We Have Strengths and Qualities That Set Us Apart Strengths Qualities Operational excellence Track record of consistent results Strategic plan and operating company structure Above average returns with below average risk Depth of business integration High say-to-do ratio, credibility and
Slide 5: Our Business Today is Vastly Different From Where We Began
Our Business Today is Vastly Different From Where We Began Beauty Beauty Housewares Beauty Health & Home 1968 2004 2019 ~$400M ~$1.56B Housewares A beauty Helen of Troy expands Three divisions company is born beyond beauty powering our growth 5
Slide 6: Proven Ability to Acquire and Integrate in Attractive Sectors
Proven Ability to Acquire and Integrate in Attractive Sectors • FY19 Net sales of $1.564B: built from acquisition and organic growth • Bolting On: success adding new categories, geographies and channels • Tucking In: new brands and adjacencies for additional growth • Right Balance: of integration an
Slide 7: Optimizing Capital Deployment
Optimizing Capital Deployment 1. Accessible, Cost-Effective Debt at Favorable Terms Capital Priorities Access 1. Infrastructure Investments 3. Strong to Cash Flow 2. Accretive Acquisitions Capital Generation 3. Opportunistic Return of Capital to Shareholders 2. Conservative Approach to Debt 7
Slide 8: Disciplined Acquisitions are Core to Our Strategy
Disciplined Acquisitions are Core to Our Strategy Select M&A Criteria 1 Favor brands with #1 or 2 Accretive to cash flow and 3 Enhances revenue growth 4 HELE likely to add value #2 market position Adjusted Diluted EPS and sweetens the mix and operational efficiency • Leading market share in category
Slide 9: Definitive Agreement to Acquire the Drybar Brand and Drybar Products LLC
Definitive Agreement to Acquire the Drybar Brand and Drybar Products LLC Adds 8th Leadership Brand to Portfolio • Fast-growing, innovative, trendsetting prestige hair care brand • World-class, award-winning products with double-digit growth • Powerful financial and strategic fit that strengthens Hel
Slide 10: Our Global Footprint
Our Global Footprint Operating Segment Shared Service Regional Market Organization Corporate Headquarters (RMO) Hydro Flask Canada RMO EMEA RMO Bend, OR Toronto Lausanne, Switzerland Health & Home Marlborough, MA Beauty Danbury, CT Shared Services China Shared Services El Paso, TX Shenzhen & Macao H
Slide 11: Evolution of Transformation Strategy
Evolution of Transformation Strategy Phase I: FY15-FY19 Phase II: FY20-FY24 Invest in Leadership Brands Optimize Double Capital Down on Deployment International Maximize Selective Operating & Strategic Efficiency M&A Accelerate Consumer Shared Service Centric Excellence Unify & Elevate the Best Peop
Slide 12: Key Elements of Phase I: FY15-FY19
Key Elements of Phase I: FY15-FY19 Transformational More Efficient and Leadership Strategy Collaborative Brands Operating Structure + + Strategic Plan Culture 12
Slide 13: Strong Portfolio of Leadership Brands
Strong Portfolio of Leadership Brands #1 #1 #1 #1 #1 #1 #1 Phase I 11.1% Leadership Brand Consumer Ear Faucet Mount Pharmacy Air Purifiers Outdoor Stylist Thermometers Purifiers Humidifiers Premium Kitchen Thermal Preferred Net Sales CAGR & Home Hydration U.S. #2 Gadgets Professional Curling Iron Pi
Slide 14: Investments in Digital are Driving Online Sales
Investments in Digital are Driving Online Sales 19% of total net sales +28 % YAGO 6% of total net sales FY14 FY15 FY16 FY17 FY18 FY19 14
Slide 15: Phase I Produced Strong Results
Phase I Produced Strong Results Revenue ($ in Millions) Adjusted Operating Income ($ in Millions) $1,564 $1,479 $239 $224 $210 $1,383 $1,398 $194 $183 $188 $1,335 $1,308 Adjusted Operating 14.0% 14.1% 14.0% 15.0% 15.1% 15.3% YOY Growth 1.5% 2.1% 3.6% 1.0% 5.8% 5.8% Margin FY14 FY15 FY16 FY17 FY18 FY
Slide 16: Phase I Adjusted Operating Margin and Growth Investment Progression
Phase I Adjusted Operating Margin and Growth Investment Progression Margin Expansion Formula: Drivers: $239 $224 + Leadership Brand Growth 15.3% $210 15.1% + New Product Development $194 15.0% 14.0% + Portfolio Enhancement + Project Refuel + Shared Service Efficiency 3-Yr Investments: CAGR 11% - Gro
Slide 17: Phase I Capital Deployment with Low Leverage and Risk
Phase I Capital Deployment with Low Leverage and Risk Capital Deployment vs Leverage Ratio • Deployed a total of ~$1.2B of $474 capital without exceeding 2.6x leverage 2.6x • Share repurchases of ~$750M $285 • Acquisition totaling ~$450M 1.9x 2.1x $218 • Ability to deploy over ~$1.3B of capital in P
Slide 18: Phase I Generated Strong Return on Invested Capital
Phase I Generated Strong Return on Invested Capital 18
Slide 19: Industry Awards Since 2018 for Outstanding Innovation, Design & Performance
39 Industry Awards Since 2018 for Outstanding Innovation, Design & Performance Honeywell HUL430 Humidifier Braun iCheck 7 Blood Pressure Monitor OXO Silicone Dough Rolling Bag OXO TOT Silicone Self Feeder (Feeding) Pur Advanced Filtration System BNA 100 Nasal Aspirator Braun ActivScan 9 Upper Arm Mo
Slide 20: Winning in the Marketplace
Winning in the Marketplace Awards received in 2018 Awards received in 2019 2018 20
Slide 21: Innovation Powered by Outstanding New Products & New Era of Cross-fertilization
Innovation Powered by Outstanding New Products & New Era of Cross- fertilization Consumer Centric 21
Slide 22: Strong Track Record as a Best-in-Class Licensee
Strong Track Record as a Best-in-Class Licensee 22
Slide 23: Strong Shareholder Return; Opportunity to Create Even More Value in Phase II
Strong Shareholder Return; Opportunity to Create Even More Value in Phase II 23
Slide 24: Phase II Transformation Began in FY20
Phase II Transformation Began in FY20 Invest in Leadership Brands Optimize Double Capital Down on Deployment International Maximize Selective Operating & Strategic Efficiency M&A Accelerate Consumer Shared Service Centric Excellence Unify & Elevate the Best People 24
Slide 25: Phase II is Designed to Deliver to All Key Stakeholders
Phase II is Designed to Deliver to All Key Stakeholders Associates Consumers Elevate our culture and Elevate lives every management capability day with high-quality to Attract, Retain, Unify solutions from and Train the best trusted, compelling people for rewarding brands long-term careers Customers
Slide 26: Phase II Financial Targets
Phase II Financial Targets* Phase II Targets* Annual Core Business Sales Growth 2.5% to 3.5% Annual Operating Margin Expansion (1) 20 to 30 bps Annual EPS Growth (2) ≥ 8% Annual Growth Investment Increase ≥ 10% ROIC (1) ≥ 20% by FY24 Annual Cash Flow From Operations Growth (1) ≥ 10% Annual Capital E
Slide 27: Culture is a Driver of Helen of Troy's Phase II Plan
Culture is a Driver of Helen of Troy’s Phase II Plan I R I S E In Touch Mutual Respect Ingenuity Shared Success Exceptional People We are deeply We treat each other as Our passion for Helen of Troy’s success A great organization is connected internally and each of us wants to be delighting consumers
Slide 28: Highly Experienced Global Leadership Team
Highly Experienced Global Leadership Team CEO Julien Mininberg Chief Chief Chief Corporate President General Chief Supply President President President Information People Financial Business Health Counsel Chain Officer Housewares Beauty International Officer Officer Officer Development & Home Tessa
Slide 29: Most Recent Results
Most Recent Results Three-Months Nine-Months Q3 FY 2020 YTD FY 2020 • Net sales +10.1%, including: • Net sales +7.3%, including: Continued Sales • Leadership Brands +10.6% • Leadership Brands +7.3% Momentum • Online channel +30.0% • Online channel +28.0% • Core business +10.7% • Core business +7.8%
Slide 30: Revised Fiscal 2020 Outlook and Key Assumptions
Revised Fiscal 2020 Outlook and Key Assumptions Headwinds/ Assumptions Revised FY20 Outlook Revised FY20 Outlook Tailwinds by Business Segment Tailwinds ▪ Normal cold/flu season ▪ Consolidated net sales revenue of $1.650 billon to $1.675 billion ▪ New product and ▪ Incremental growth ▪ implies growt
Slide 31: Phase II Strategic Choices
Phase II Strategic Choices WHERE TO PLAY Phase I Phase II ➢ Invest in Our Core ➢ Invest in Leadership Brands ➢ Double Down on International ➢ Strategic, Disciplined M&A ➢ Selective & Strategic M&A Phase I Phase II HOW TO WIN ➢ Consumer-Centric Innovation ➢ Consumer Centric ➢ Upgrade Our Organization
Slide 32: Transformation Phase II: Key Messages
Transformation Phase II: Key Messages 01 02 03 04 FY19 and 3-year Strategic formula Track record of Strong financial results is enabling margin consistent annual shareholder return show acceleration expansion while results with the making higher opportunity to levels of create even more investment v
Slide 33: Value Creation Flywheel
Value Creation Flywheel Accretive and Low Risk Leadership Brand Capital Deployment Innovation and Investment Organic Revenue Low Capex Growth Working Capital Margin Expansion Improvement Debt and Tax Efficiency 33
Slide 34: Business Segments
Helen of Troy Business Segments
Slide 35: Health & Home
Health & Home Award-winning, Global Branded, Consumer Device Business Health Home Delighting consumers with trusted solutions for healthy living and 35 peace of mind
Slide 36: Health
Health Theregionscan 7 Theregionscan 5 Theregionscan Lens No Touch + Digital Nasal 3-in-1 No Forehead ActivScan 9 iCheck 7 3 Filters Forehead Stick Aspirator Touch THERMOMETERS SINUS BLOOD PRESSURE MONITORS Sinus Sweet Warm Mist Mini Filter Free Filter Free Easy Fill 15 Second 8 Second 2 Second Trac
Slide 37: Home
Home Leadership Brand Air Genius Ture HEPA Cool Moisture Cool Moisture Warm Mist Cool Mist Cool Mist Cool True HEPA True HEPA Air Genius Air Genius Humidity True HEPA Quiet Clean Permanent Professional Med Room Lg Room 99.9% Germ-free Ultrasonic Tower Lg Moisture Bluetooth Tower Permanent Permanent
Slide 38: Housewares
Housewares $524** $459** Make everyday better, every day. $418 $296 $310 $259 $274 $237 $217 $199 $164 $175 $138 $128 $98* 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 38 Source: Helen of Troy * Proforma FY 2005 Sales – HOT acquired June 2004. ** Results for Fiscal 2018
Slide 39: Housewares Products
940 Products TOOLS GADGETS MEASURING BAKING TOOLS BAKEWARE COOKWARE DRY FOOD STORAGE WET FOOD STORAGE BATH CLEANING BATH ORG. COFFEE BEVERAGE UTILITY TOT SEATING TOT FEEDING TOT BATH TOT ON THE GO TOT CLEANING 39
Slide 40: Hydro Flask Products
69 products Standard Wide Oasis Coffee Coffee Tumbler Cooler Growler Wine Wine Rocks Food Bottle Bottle Straw & Lid Flex Mouth Mouth Flip Lid Mug Cup Bottle Tumbler Flask Sling Brush Cleaning Kit Boot HYDRATION COFFEE DRINKWARE BEER WINE SPIRITS FOOD ACCESSORIES Soft Cooler Insulated Insulated Hydra
Slide 41: The Helen of Troy Beauty Portfolio
The Helen of Troy Beauty Portfolio Liquids, Tools and Accessories Flat Irons Curling Irons Dryers Specialty Tools and Accessories PRESTIGE PROFESSIONAL BRUSHES COMBS & ACCESSORIES Flat Irons Dryers Specialty Dryers Curing Irons Curing Irons Flat Irons RETAIL APPLIANCES PERSONAL CARE 41 41
Slide 42: Appendix
Helen of Troy Appendix
Slide 43: Glossary of Terms
Glossary of Terms Acquisition-related Expenses – Expenses associated with the definitive agreement to Continuing Operations – All references to the Company’s continuing operations exclude the acquire Drybar Products LLC Nutritional Supplements segment with the exception of stockholders’ equity for t
Slide 44: Glossary of Terms
Glossary of Terms Individual Peers - A subset of the Company’s compensation peer group was selected for direct comparison on valuation metrics based on as-reported amounts in public filings. This subset includes Church & Dwight Co. Inc., The Clorox Company, Edgewell Personal Care Company, Prestige C
Slide 45: Reconciliation of GAAP Operating Income to Adjusted Operating Income
Reconciliation of Non-GAAP Financial Measures - GAAP Operating Income to Adjusted Operating Income (non-GAAP) (Unaudited) (in thousands) 45
Slide 46: Reconciliation of GAAP Diluted EPS to Adjusted Diluted EPS
Reconciliation of GAAP Diluted Earnings Per Share (“EPS”) to Adjusted Diluted EPS (non-GAAP)(Unaudited) 46
Slide 47: Reconciliation of Net Cash from Operating Activities to Free Cash Flow
Reconciliation of Net Cash Provided by Operating Activities (GAAP) to Free Cash Flow (non-GAAP)(Unaudited) (in thousands) 47
Slide 48: Condensed Consolidated Statements of Income and Non-GAAP Reconciliation
Condensed Consolidated Statements of Income and Reconciliation of Non-GAAP Financial Measures – Adjusted Operating Income, Adjusted Income from Continuing Operations and Adjusted Diluted Earnings Per Share (“EPS”) from Continuing Operations (Unaudited) (in thousands, except per share data) (1) Amort
Slide 49: Condensed Consolidated Statements of Income and Non-GAAP Reconciliation
Condensed Consolidated Statements of Income and Reconciliation of Non-GAAP Financial Measures – Adjusted Operating Income, Adjusted Income from Continuing Operations and Adjusted Diluted Earnings Per Share (“EPS”) from Continuing Operations (Unaudited) (in thousands, except per share data) (1) Amort
Slide 50: Condensed Consolidated Statements of Income and Non-GAAP Reconciliation
Condensed Consolidated Statements of Income and Reconciliation of Non-GAAP Financial Measures – Adjusted Operating Income, Adjusted Income from Continuing Operations and Adjusted Diluted Earnings Per Share (“EPS”) from Continuing Operations (Unaudited) (in thousands, except per share data) (1) Amort
Slide 51: Condensed Consolidated Statements of Income and Non-GAAP Reconciliation
Condensed Consolidated Statements of Income and Reconciliation of Non-GAAP Financial Measures – Adjusted Operating Income, Adjusted Income from Continuing Operations and Adjusted Diluted Earnings Per Share (“EPS”) from Continuing Operations (Unaudited) (in thousands, except per share data) (1) Amort
Slide 52: Consolidated and Segment Net Sales, Operating Margin and Adjusted Operating Margin
Consolidated and Segment Net Sales, Operating Margin and Adjusted Operating Margin (non-GAAP) (Unaudited) (in thousands) 52
Slide 53: Consolidated and Segment Net Sales, Operating Margin and Adjusted Operating Margin
Consolidated and Segment Net Sales, Operating Margin and Adjusted Operating Margin (non-GAAP) (Unaudited) (in thousands) 53
Slide 54: Leadership Brand Net Sales Revenue
Leadership Brand Net Sales Revenue (Unaudited)(in thousands) 54
Slide 55: Reconciliation of GAAP Operating Income to Adjusted Operating Income
Reconciliation of Non-GAAP Financial Measures – GAAP Operating Income to Adjusted Operating Income (non-GAAP) (Unaudited) (in thousands) 55
Slide 56: Reconciliation of GAAP Operating Income to Adjusted Operating Income
Reconciliation of Non-GAAP Financial Measures – GAAP Operating Income to Adjusted Operating Income (non-GAAP) (Unaudited) (in thousands) 56
Slide 57: Reconciliation of GAAP Income and Diluted EPS to Adjusted
Reconciliation of GAAP Income and Diluted Earnings Per Share (“EPS”) from Continuing Operations to Adjusted Income and Adjusted EPS from Continuing Operations (non-GAAP)(Unaudited) (dollars in thousands, except per share data) 57
Slide 58: Reconciliation of GAAP Income and Diluted EPS to Adjusted
Reconciliation of GAAP Income and Diluted Earnings Per Share (“EPS”) from Continuing Operations to Adjusted Income and Adjusted EPS from Continuing Operations (non-GAAP) (Unaudited) (dollars in thousands, except per share data) 58
Slide 59: Selected Consolidated Balance Sheet, Cash Flow and Liquidity Information
Selected Consolidated Balance Sheet, Cash Flow and Liquidity Information (Unaudited) (in thousands) 59
Slide 60: Fiscal Year 2020 Updated Outlook
Fiscal Year 2020 Updated Outlook Fiscal 2020 Updated Outlook for Net Sales Revenue (Unaudited) (in thousands) Reconciliation of Fiscal 2020 Updated Outlook for GAAP Diluted Earnings Per Share (“EPS”) from Continuing Operations to Adjusted Diluted EPS from Continuing Operations (non-GAAP) (Unaudited)