Helen Of Troy said sales in its Home & Outdoor segment, including OXO, Hydro Flask and Osprey, increased 29.8 percent in the fourth quarter ended February 28, to $210.8 million.

The growth was driven by an increase in Organic business of $24.7 million, or 15.2 percent and growth from the acquisition of Osprey of $24.4 million, or 15.0 percent. The business increase was primarily due to higher brick-and-mortar and online channel sales driven by consumer demand, accelerated retailer orders to improve inventory levels and in anticipation of price increases, higher sales in the club and closeout channels, the impact of customer price increases related to rising freight and product costs, growth in international sales, and the favorable comparative impact of COVID-19-reduced store traffic and orders that were not shipped at the end of the fourth quarter of fiscal 2021 due to Winter Storm Uri.

Operating income in the Home & Outdoor segment, formerly called Housewares, increased 39.7 percent to $22.6 million, or 10.7 percent of segment net sales revenue, compared to $16.2 million, or 10.0 percent of segment net sales revenue. The 0.7 percentage point increase resulted from favorable operating leverage, a more favorable brand mix and decreased distribution expense. These factors were partially offset by the net dilutive impact of inflationary costs and related customer price increases, higher inventory obsolescence expense, increased personnel expense, higher acquisition-related expenses and higher amortization expense. Adjusted operating income increased 45.2 percent to $27.5 million, or 13.1 percent of segment net sales revenue, compared to $19.0 million, or 11.7 percent of segment net sales revenue.

Companywide, consolidated net sales revenue increased 14.3 percent to $582.0 million compared to $509.4 million. The growth was driven by an increase from Organic business of $50.2 million, or 9.9 percent, and from the acquisition of Osprey Packs, Inc. of $24.4 million, or 4.8 percent. The Organic business increase primarily reflects higher brick-and-mortar and online channel sales in the Home & Outdoor and Beauty segments due primarily to consumer demand, approximately $20 million of accelerated retailer orders to improve inventory levels and in anticipation of price increases, higher sales in the club and closeout channels, the impact of customer price increases related to rising freight and product costs, growth in consolidated international sales and the favorable comparative impact of orders that were not shipped at the end of the fourth quarter of fiscal 2021 due to Winter Storm Uri. These factors were partially offset by a decrease in sales in the Health & Wellness segment as a result of COVID-19-driven demand for healthcare and healthy living products, primarily in thermometry and air filtration, in the comparative prior-year period, and a net sales revenue decline in Non-Core business primarily due to the sale of the North America Personal Care business during the second quarter of fiscal 2022.

In its other two segments, Health & Wellness net sales revenue decreased 0.4 percent to $227.6 million, and revenue from the Beauty Core business increased 31.5 percent to $118.2 million. Helen of Troy’s other brands include Vicks, Braun, Honeywell, PUR, Hot Tools and Drybar.

Consolidated operating income was $50.4 million, or 8.7 percent of net sales revenue, compared to $24.5 million, or 4.8 percent of net sales revenue. The increase in consolidated operating margin was primarily due to a decrease in marketing expense in the Health & Wellness segment, the favorable comparative impact of asset impairment charges recorded in the prior-year period and lower marketing expense in the Beauty segment, lower distribution expense, and a more favorable brand mix in the Home & Outdoor segment, favorable consolidated operating leverage, and a favorable mix of more Home & Outdoor and Beauty segment sales within consolidated net sales revenue. These factors were partially offset by EPA compliance costs of $11.4 million, the net dilutive impact of inflationary costs and related customer price increases, increased inventory obsolescence expense, an increase in annual incentive compensation expense, higher outbound freight costs, and a less favorable channel mix within the Beauty segment.

Net income was $39.8 million, compared to $22.2 million. Diluted EPS was $1.64 compared to $0.90. The increase in diluted EPS was primarily due to higher operating income in all segments and lowered weighted average diluted shares outstanding. These factors were partially offset by an increase in the effective income tax rate and higher interest expense.

Adjusted income increased 56.9 percent, to $60.8 million, compared to $38.8 million. Adjusted diluted EPS increased 59.9 percent to $2.51, compared to $1.57. The increase in adjusted diluted EPS was primarily due to higher adjusted operating income in the Home & Outdoor and Health & Wellness segments and lower weighted average diluted shares outstanding. These factors were partially offset by lower adjusted operating income in the Beauty segment, an increase in the effective income tax rate and higher interest expense.

Adjusted results exclude acquisition-related expenses, asset impairment charges, EPA compliance costs, restructuring charges, amortization of intangible assets, and non-cash share-based compensation.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased 61.9 percent to $78.7 million compared to $48.6 million.

Julien R. Mininberg, CEO, said: “Our fourth-quarter results significantly outperformed our expectations in each business segment, delivering an exceptionally strong finish to our fiscal year. We are very proud that fiscal 2022 marks another year of top and bottom-line growth well ahead of our Phase II targets, despite the global pandemic, supply chain disruption, inflation, the EPA matter, and the elevated base.

“Looking back over the first three years of Phase II, core net sales and core adjusted diluted EPS increased by 50 percent and 68 percent, respectively. We believe our performance so far in Phase II illustrates the strength of our strategic choices, the power of our diversified portfolio, the return on investments in our Leadership Brands and shared services, and the winning culture and organization we have built. We are proud that our results contributed to total shareholder returns significantly ahead of our proxy peer group since the start of Phase II and all through Phase I.

“As we now begin the fourth year of Phase II, we are pleased to be able to provide our outlook for continued top and bottom-line growth in fiscal 2023. We expect our recent acquisitions of Osprey and Curlsmith will drive revenue and adjusted EPS growth and further expand margins. Our outlook includes our current assessment of the impact from continued widespread inflation on input costs and consumer buying power, further supply chain disruption, and expected rising interest rates. Our outlook also reflects the work we have done with our supply chain partners, cost mitigation measures, pre-negotiated sea freight contracts, and price increases. We will continue to make thoughtful spending choices that support the most important opportunities for our brands, cost efficiency projects, new capabilities, and further scalability for our shared services. We believe this approach will help us continue creating incremental value for shareholders in the remaining two years of Phase II and beyond.”

Subsequent Events
On March 30, 2022, a third-party facility that the company uses to store inventory incurred severe damage from a weather-related incident. The inventory is primarily related to its Health & Wellness and Beauty segments. While it was insured, some seasonal products and inventory designated for specific customer promotions are not accessible and, as a result, may unfavorably impact its net sales revenue in the first half of fiscal 2023. The company is working with local officials and its insurance company to understand the extent of the damage, however the building must be assessed and made structurally sound before it will have access to the inventory and fully assess damages.

On April 22, 2022, the company completed the acquisition of Recipe Products, Ltd., a producer of hair care products for curly and wavy hair under the Curlsmith brand. The total purchase consideration, net of cash acquired, was $150.0 million in cash, subject to certain customary closing adjustments. The acquisition was funded with cash on hand and borrowings under the company’s existing revolving credit facility.

Executive Leadership Update
Noel Geoffroy will join Helen of Troy as Chief Operating Officer on May 9, 2022 overseeing day-to-day business and executing the company’s major Phase II projects. Geoffroy joins Helen of Troy with over 25 years of experience in president and general manager roles at Sanofi in Consumer Healthcare, Kellogg, H. J. Heinz, and Procter & Gamble.

Fiscal 2023 Annual Outlook
The company expects consolidated net sales revenue in the range of $2.38 billion to $2.42 billion, which implies consolidated growth of 6.8 percent to 8.8 percent and Core business growth of 8.5 percent to 10.5 percent.

The company’s fiscal year net sales outlook reflects the following expectations by segment:

  • Home & Outdoor net sales growth of 19.0 percent to 21.0 percent, including net sales from Osprey of $180 million to $185 million;
  • Health & Wellness net sales decline of 1.0 percent to growth of 1.0 percent; and
  • Beauty Core business net sales growth of 4.5 percent to 7.5 percent; including net sales from Curlsmith of $30 million to $35 million

The company expects consolidated GAAP diluted EPS of $9.92 to $10.38 and consolidated non-GAAP adjusted diluted EPS in the range of $12.73 to $13.03, which implies consolidated adjusted diluted EPS growth of 3.0 percent to 5.4 percent and Core adjusted diluted EPS growth of 4.5 percent to 7.0 percent. This includes adjusted diluted EPS contribution from Osprey of $0.50 to $0.55 and $0.20 to $0.25 from Curlsmith.

Photo courtesy Helen of Troy/Curlsmith