Helen Of Troy Limited · NASDAQ:HELE
Helen Of Troy — Q1 FY2021 Earnings Presentation
55 slides from Helen Of Troy's earnings presentation, July 2020
Slide 1: Investor Presentation
Invest in Leadership Brands Optimize Double Capital Down on Deployment International Maximize Selective Investor Presentation Operating Efficiency & Strategic M&A July 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: availability and capacity, and timely availability of sufficient shipping carrier capacity, labor and energy on cost of goods sold and certain operating expenses, the risks associated with signif
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 Leadership Brands through a strong diversified portfolio of well- Exciting Growth Drivers recognized and widely-trusted brands in Hea
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 Housewares 1968 2004 ~$400M 2020 ~$1.707B Health & Home A beauty Expansion beyond Three divisions company is born 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 • FY20 Net sales of $1.707B: 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 to 2. Conservative Approach to 2. Accretive Acquisitions Capital Debt 3. Opportunistic Return of Capital to Shareholders 3. Strong Cash Flow Generation 7
Slide 8: Disciplined Acquisitions are Core to Our Strategy
Disciplined Acquisitions are Core to Our Strategy Select M&A Criteria Favor brands with Accretive to cash flow and Enhances revenue growth and 1 #1 or #2 market position 2 Adjusted Diluted EPS 3 sweetens the mix • Leading market share in category, or • Accretive to earnings (in one or two years) • E
Slide 9: Acquisition of Drybar Brand Adds 8th Leadership Brand to Portfolio
Acquisition of Drybar Brand 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 Helen of Troy • Unique market position: the only
Slide 10: Our Global Footprint
Our Global Footprint Operating Segment Shared Service Regional Market Organization Corporate Headquarters (RMO) Housewares 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 Ho
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 Leadership Brand Progression ˜20% ˜44% ˜56% ˜80% Leadership Leadership Brands Brands Beginning of FY20 Phase I Phase II Transformation Transformation FY2014 Differentiated Market Leader Leadership Brand Net Sales Higher Margin • Phase I (FY14 – FY19) +11.1% CAGR
Slide 14: Digital Transformation Investments Have More Than Quadrupled Online Sales
Digital Transformation Investments Have More Than Quadrupled Online Sales Online Channel Net Sales as a % of Total Company Net Sales* 30% 25% 28% 20% 24% 15% 19% +33 % Vs FY20** 10% 16% 12% Q1Three 9% 9% Months 5% 6% ended May 31, 2020 0% FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 PHASE I PHASE II * As
Slide 15: Transformation Phase II: Off to a Strong Start with FY20 Results
Transformation Phase II: Off to a Strong Start with FY20 Results Revenue ($ in Millions) Adjusted Operating Income ($ in Millions) $269 $1,707 $239 $1,564 $224 $210 $1,479 $194 $1,398 $183 $188 $1,383 $1,308 $1,335 Adjusted Operating 14.0% 14.1% 14.0% 15.0% 15.1% 15.3% 15.8% YOY Growth 1.5% 2.1% 3.6
Slide 16: Transformation Has Produced Excellent Core Business Growth
Transformation Has Produced Excellent Core Business Growth Revenue ($ in Millions) / Growth Rate Non-GAAP Adjusted Diluted EPS / Growth Rate Total: Total: 6.9% CAGR 12.8% CAGR Core: Core: 8.0% CAGR 13.8% CAGR Non-Core: Non-Core: (7.4%) CAGR 0.6% CAGR Core business is defined as strategic business th
Slide 17: Adjusted Operating Margin and Growth Investment Progression
Adjusted Operating Margin and Growth Investment Progression ($ in Millions) Margin Expansion Formula: Drivers • Leadership brand growth $269 • New product development $239 $224 15.8% • Portfolio enhancement 15.3% • Project Refuel $210 $194 15.1% • Shared service efficiency 15.0% 14.0% Investments •
Slide 18: Phase I Generated Strong Return on Invested Capital
Phase I Generated Strong Return on Invested Capital 18
Slide 19: Strong Shareholder Return; Opportunity to Create Even More Value in Phase II
Strong Shareholder Return; Opportunity to Create Even More Value in Phase II 19
Slide 20: 45 Industry Awards Since 2018 for Outstanding Innovation, Design & Performance
45 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 21: Winning in the Marketplace
Winning in the Marketplace Brand Year Result Category Industry Performance Award New : Brand "Industry Award" Winner 2020 Winner US Housewares for Top Increase in Market Share 2020 Winner Food Storage Largest Dollar Share Increase 2019 Winner Food Storage Top Increase in Market Share 2018 Winner Gad
Slide 22: Strong Track Record as a Best-in-Class Licensee
Strong Track Record as a Best-in-Class Licensee 22
Slide 23: 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 23
Slide 24: 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 management Elevate lives every day with capability to attract, retain, unify and high-quality solutions from train the best people for rewarding trusted, compelling brands long-term careers Customers
Slide 25: Phase II Financial Targets
Phase II Financial Targets* Phase II Targets* Annual Organic 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 Capita
Slide 26: Culture is Core to Helen of Troy's Phase II Plan
Culture is Core to 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 and
Slide 27: Global Leadership Team
Highly Experienced Global Leadership Team Julien Mininberg Chief Executive Officer Christophe Coudray Brian Grass President of Health & Home Chief Financial Officer Larry Witt Lisa Kidd President of Housewares Chief People Officer Global Ronald Anderskow President of Global Beauty Leadership Jay Car
Slide 28: Most Recent Results
Most Recent Results Three-Months Q1 FY 2021 vs. Prior Year Period • Net sales +11.8%, including: COVID-19 Drives • Leadership Brands +15.7% High Demand • Online channel ~+33% • Organic business +11.1% • Core business +12.2% • Adjusted operating margin expanded 1.1 percentage points to 16.9%, primari
Slide 29: Transformation Phase II: Strategic Choices
Transformation Phase II: Strategic Choices Optimize Capital Invest in Double Down on Deployment Leadership Brands International • Capital priorities carry over from Phase I: • Raise support levels, capture full consumer journey • Focus on Asia Pacific & Europe o Infrastructure investments #1 • Enabl
Slide 30: 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 30
Slide 31: Business Segments
Helen of Troy Business Segments
Slide 32: Housewares
Housewares $700 $641 $600 $524# Make everyday better, every day. $459# $500 $418** $400 $310 $296 $274 $300 $259 $237 $217 $199 $164 $175 $200 $138 $128 $98* $100 $ in Millions $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: Helen of Troy 32 * Proforma FY 2
Slide 33: Housewares Product Categories
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 33
Slide 34: Hydration, Coffee and Soft Coolers
Bottle Standard Wide Trail Oasis Coffee Coffee Tumbler Cooler Growler Wine Wine Rocks Food Sling Bottle Straw & Lid Flex Flex Sip Mouth Mouth Series Mug Cup Bottle Tumbler Flask Brush Cleaning Kit Boot Lid Hydration Coffee Drinkware Beer Wine Spirits Food Accessories Soft Cooler Insulated Insulated
Slide 35: Health & Home
Health & Home Award-winning, Global Branded, Consumer Device and Consumable Business Health & Home Leadership Brands Health $685M Home FY20 Sales Delighting consumers with trusted solutions for healthy living and 35 peace of mind
Slide 36: Health & Home Health
Health & Home Health Thermoscan 7 Thermoscan 5 Thermoscan 3 Lens No Touch + Digital Nasal 3-in-1 No Forehead ActivScan 9 iCheck 7 (Ear) (Ear) (Ear) Filters Forehead Stick Aspirator Touch Thermometers Sinus Blood Pressure Monitors Sinus Sweet Warm Mist Mini Filter Free Filter Free Easy Fill 15 Second
Slide 37: Health & Home Home
Health & Home Home Leadership Brand Air Genius Ture HEPA Honeywell 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 Designer Series Med Room Lg Room 99.9% Germ-free Ultrasonic Tower Lg Moist
Slide 38: The Helen of Troy Beauty Portfolio
The Helen of Troy Beauty Portfolio Volumizer Tools, Liquids and Accessories Flat Irons Curling Irons Dryers Specialty Tools and Accessories Prestige Professional Brushes Combs & Accessories Volumizer Flat Irons Dryers Dryers Specialty Curing Irons Flat Irons Curing Irons Retail Appliances Personal C
Slide 39: Appendix
Helen of Troy Appendix
Slide 40: 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 41: Glossary of Terms
Glossary of Terms Peer Group – Derived from the Company’s compensation peer group for FY20, which includes Church & Dwight Co. Inc., The Clorox Company, Coty Inc., Edgewell Personal Care Company, Energizer Holdings, Inc., La-Z-Boy Incorporated, Libbey Inc., Lifetime Brands Inc., Newell Brands, Inc.,
Slide 42: 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) Fiscal Years Ended the Last Day of February 2020 2019 2018 2017 2016 2015 2014 Operating income as reported (GAAP) $ 178,251 10.4 % $ 199,379 12.7 % $ 169,062 11.4
Slide 43: Reconciliation of GAAP Diluted EPS to Adjusted Diluted EPS
Reconciliation of GAAP Diluted Earnings Per Share (“EPS”) to Adjusted Diluted EPS (non-GAAP)(Unaudited) Fiscal Years Ended the Last Day of February 2020 2019 2018 2017 2016 2015 2014 Diluted EPS as reported (GAAP) $ 6.02 $ 6.62 $ 4.73 $ 5.17 $ 3.23 $ 4.36 $ 2.66 Tax reform — — 0.66 — — — — Asset imp
Slide 44: Reconciliation of Operating Cash Flow to Free Cash Flow
Reconciliation of Net Cash Provided by Operating Activities (GAAP) to Free Cash Flow and Free Cash Flow Per Diluted Share (non-GAAP)(Unaudited) (in thousands) Fiscal Years Ended the Last Day of February 2020 2019 2018 2017 2016 2015 2014 Net cash provided by operating activities (GAAP) $ 271,293 $ 2
Slide 45: Consolidated Core and Non-Core Net Sales and Diluted EPS Reconciliation
Consolidated Core and Non-Core Net Sales and Reconciliation of Core and Non-Core Diluted EPS to Core and Non-Core Adjusted Diluted EPS (non-GAAP) (Unaudited) (dollars in thousands except share data) Fiscal Years Ended Last Day of February, $ Change % Change 2020 2019 2018 2017 20/19 19/18 18/17 20/1
Slide 46: Adjusted Operating Income, Adjusted Income and Adjusted Diluted EPS
Condensed Consolidated Statements of Income and Reconciliation of Non-GAAP Financial Measures – Adjusted Operating Income, Adjusted Income and Adjusted Diluted EPS (Unaudited) (in thousands, except per share data) Three Months Ended May 31, 2020 As Reported Adjustments Adjusted (GAAP) (Non-GAAP) Sal
Slide 47: Adjusted Operating Income, Adjusted Income and Adjusted Diluted EPS
Condensed Consolidated Statements of Income and Reconciliation of Non-GAAP Financial Measures – Adjusted Operating Income, Adjusted Income and Adjusted Diluted EPS (Unaudited) (in thousands, except per share data) Three Months Ended May 31, 2019 As Reported Adjustments Adjusted (GAAP) (Non-GAAP) Sal
Slide 48: Consolidated and Segment Net Sales (non-GAAP)
Consolidated and Segment Net Sales (non-GAAP) (Unaudited) (in thousands) Three Months Ended May 31, Housewares Health & Home Beauty Total Fiscal 2020 sales revenue, net $ 144,942 $ 154,943 $ 76,450 $ 376,335 Organic business (3,927) 46,778 (1,176) 41,675 Impact of foreign currency (387) (1,765) (2,6
Slide 49: Consolidated and Segment Net Sales from Core and Non-Core Business
Consolidated and Segment Net Sales from Core and Non-Core Business (Unaudited) (in thousands) Three Months Ended May 31, Housewares Health & Home Beauty Total Fiscal 2020 sales revenue, net $ 144,942 $ 154,943 $ 76,450 $ 376,335 Core business (4,314) 45,013 5,244 45,943 Non-core business (Personal C
Slide 50: Leadership Brand Net Sales Revenue
Leadership Brand Net Sales Revenue (Unaudited)(in thousands) Three Months Ended May 31, 2020 2019 $ Change % Change Leadership Brand sales revenue, net $ 349,030 $ 301,559 $ 47,471 15.7 % All other sales revenue, net 71,805 74,776 (2,971) (4.0) % Total sales revenue, net $ 420,835 $ 376,335 $ 44,500
Slide 51: GAAP Operating Income to Adjusted Operating Income by Segment
Reconciliation of Non-GAAP Financial Measures – GAAP Operating Income to Adjusted Operating Income (non-GAAP) (Unaudited) (in thousands) Three Months Ended May 31, 2020 Housewares Health & Home Beauty Total Operating income, as reported (GAAP) $ 23,233 16.5 % $ 31,533 15.8 % $ 2,213 2.8 % $ 56,979 1
Slide 52: Reconciliation of GAAP Net Income and Diluted EPS to Adjusted EPS
Reconciliation of GAAP Net Income and Diluted Earnings Per Share (“EPS”) to Adjusted Income and Adjusted EPS (non-GAAP) (Unaudited) (dollars in thousands, except per share data) Three Months Ended May 31, 2020 Income Diluted EPS Before Tax Tax Net of Tax Before Tax Tax Net of Tax As reported (GAAP)
Slide 53: Consolidated Core and Non-Core Net Sales and Diluted EPS Reconciliation
Consolidated Core and Non-Core Net Sales and Reconciliation of Core and Non-Core Diluted EPS to Core and Non-Core Adjusted Diluted EPS (non-GAAP) (Unaudited) (dollars in thousands, except share data) Three Months Ended May 31, 2020 2019 $ Change % Change Sales revenue, net Core $ 399,519 $ 353,576 $
Slide 54: Reconciliation of Core and Non-Core Diluted EPS to Adjusted Diluted EPS
Reconciliation of Core and Non-Core Diluted EPS to Core and Non-Core Adjusted Diluted EPS (non-GAAP) (Unaudited) Three Months Ended May 31, Core Business: 2020 2019 Diluted EPS, as reported $ 2.27 $ 1.52 Restructuring charges, net of tax 0.01 0.02 Tax Reform (0.37) — Subtotal $ 1.92 $ 1.55 Amortizat
Slide 55: Selected Consolidated Balance Sheet, Cash Flow and Liquidity Information
Selected Consolidated Balance Sheet, Cash Flow and Liquidity Information (Unaudited) (in thousands) May 31, 2020 2019 Balance Sheet: Cash and cash equivalents $ 88,517 $ 18,375 Receivables, net 332,769 262,511 Inventory, net 276,327 335,344 Total assets, current 757,036 635,994 Total assets 1,975,68