Helen of Troy Earnings 2020-08-31

Balance Sheet	Income Statement	Cash Flow
Assets, Equity	Rev, G Profit, Net Income	Ops, Inv, Fin

hele-20200831

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended August 31, 2020

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ..... to …..

Commission file number: 001-14669

HELEN OF TROY LIMITED

(Exact name of registrant as specified in its charter)

Bermuda 74-2692550

(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)

Clarendon House, 2 Church Street, Hamilton, Bermuda

(Address of principal executive offices)

1 Helen of Troy Plaza, El Paso, Texas 79912

(Registrant’s United States Mailing Address) (Zip Code)

(915) 225-8000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange on which registered

Common Shares, $0.10 par value per share

HELE

The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒ Accelerated filer ☐

Non-accelerated filer ☐ Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of October 2, 2020 there were 25,353,261 shares of common stock of the registrant, $0.10 par value per share, outstanding.

Table of Contents

HELEN OF TROY LIMITED AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS


		PAGE

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	2

	Note 1 - Basis of Presentation and Related Information	7
	Note 2 - New Accounting Pronouncements	8
	Note 3 - Revenue Recognition	9
	Note 4 - Leases	10
	Note 5 - Assets Held for Sale	11
	Note 6 - Supplemental Balance Sheet Information	12
	Note 7 - Acquisitions	12
	Note 8 - Goodwill and Intangible Assets	14
	Note 9 - Share-Based Compensation Plans	15
	Note 10 - Repurchase of Helen of Troy Common Stock	16
	Note 11 - Restructuring Plan	17
	Note 12 - Commitments and Contingencies	17
	Note 13 - Long-Term Debt	17
	Note 14 - Fair Value	19
	Note 15 - Financial Instruments and Risk Management	20
	Note 16 - Accumulated Other Comprehensive Income (Loss)	23
	Note 17 - Segment Information	23
	Note 18 - Income Taxes	24
	Note 19 - Earnings Per Share	25

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	52

Item 4.	Controls and Procedures	53

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	53

Item 1A.	Risk Factors	53

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	53

Item 6.	Exhibits	55

SIGNATURES			56

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)


(in thousands, except shares and par value)	August 31, 2020		February 29, 2020
Assets
Assets, current:
Cash and cash equivalents	$	148,399	$	24,467
Receivables - principally trade, less allowances of $2,493 and $1,461	402,027		348,023
Inventory	350,180		256,311
Prepaid expenses and other current assets	6,925		9,229
Income taxes receivable	3,356		—
Assets held for sale	41,031		44,806
Total assets, current	951,918		682,836

Property and equipment, net of accumulated depreciation of $141,552 and $132,340	137,024		132,107
Goodwill	739,901		739,901
Other intangible assets, net of accumulated amortization of $157,925 and $148,891	292,790		300,952
Operating lease assets	32,143		32,645
Deferred tax assets, net	17,934		14,635
Other assets, net of accumulated amortization of $2,167 and $2,167	2,483		807
Total assets	$	2,174,193	$	1,903,883

Liabilities and Stockholders' Equity
Liabilities, current:
Accounts payable, principally trade	$	280,487	$	152,674
Accrued expenses and other current liabilities	217,964		183,157
Income taxes payable	—		1,181
Long-term debt, current maturities	1,884		1,884
Total liabilities, current	500,335		338,896

Long-term debt, excluding current maturities	298,247		337,421
Lease liabilities, non-current	40,039		40,861
Deferred tax liabilities, net	5,092		4,224
Other liabilities, non-current	21,951		20,758
Total liabilities	865,664		742,160

Commitments and contingencies

Stockholders' equity:
Cumulative preferred stock, non-voting, $1.00 par. Authorized 2,000,000 shares; none issued	—		—
Common stock, $0.10 par. Authorized 50,000,000 shares; 25,328,306 and 25,193,766 shares issued and outstanding	2,533		2,519
Additional paid in capital	274,643		268,043
Accumulated other comprehensive loss	(14,320)		(7,005)
Retained earnings	1,045,673		898,166
Total stockholders' equity	1,308,529		1,161,723
Total liabilities and stockholders' equity	$	2,174,193	$	1,903,883

See accompanying notes to condensed consolidated financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Income (Unaudited)


	Three Months Ended August 31,						Six Months Ended August 31,
(in thousands, except per share data)	2020		2019		2020		2019
Sales revenue, net	$	530,852	$	413,995	$	951,687	$	790,330
Cost of goods sold	300,516		235,844		542,050		458,452
Gross profit	230,336		178,151		409,637		331,878

Selling, general and administrative expense ("SG&A")	131,027		123,201		253,016		229,102

Restructuring charges	34		430		367		1,049
Operating income	99,275		54,520		156,254		101,727

Non-operating income, net	111		89		347		221
Interest expense	(2,796)		(3,216)		(6,642)		(6,524)
Income before income tax	96,590		51,393		149,959		95,424

Income tax expense	9,257		5,298		2,340		8,635
Net income	87,333		46,095		147,619		86,789




Earnings per share ("EPS"):
Basic	$	3.45	$	1.84	$	5.84	$	3.46
Diluted	3.43		1.83		5.81		3.44








Weighted average shares used in computing EPS:
Basic	25,325		25,116		25,289		25,068
Diluted	25,458		25,245		25,428		25,245

See accompanying notes to condensed consolidated financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended August 31,						Six Months Ended August 31,
(in thousands)	2020		2019		2020		2019
Net income	$	87,333	$	46,095	$	147,619	$	86,789
Other comprehensive income (loss), net of tax:
Cash flow hedge activity - interest rate swaps	731		(3,168)		(1,876)		(7,161)
Cash flow hedge activity - foreign currency contracts	(6,134)		424		(5,439)		1,215
Total other comprehensive loss, net of tax	(5,403)		(2,744)		(7,315)		(5,946)
Comprehensive income	$	81,930	$	43,351	$	140,304	$	80,843

See accompanying notes to condensed consolidated financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Stockholders’ Equity


	Common Stock					Additional Paid in Capital		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total Shareholders' Equity
(in thousands, including shares)	Shares	Par Value
Balances at May 31, 2020	25,321	$	2,532	$	269,797	$	(8,917)	$	958,340	$	1,221,752
Net income	—	—		—		—		87,333		87,333

Other comprehensive loss, net of tax	—	—		—		(5,403)		—		(5,403)
Exercise of stock options	4	1		370		—		—		371
Net issuance and settlement of restricted stock	4	—		—		—		—		—
Issuance of common stock related to stock purchase plan	—	—		—		—		—		—
Common stock repurchased and retired	(1)	—		(148)		—		—		(148)
Share-based compensation	—	—		4,624		—		—		4,624

Balances at August 31, 2020	25,328	$	2,533	$	274,643	$	(14,320)	$	1,045,673	$	1,308,529

Balances at February 29, 2020	25,194	$	2,519	$	268,043	$	(7,005)	$	898,166	$	1,161,723
Net income	—	—		—		—		147,619		147,619

Other comprehensive loss, net of tax	—	—		—		(7,315)		—		(7,315)
Exercise of stock options	12	2		845		—		—		847
Net issuance and settlement of restricted stock	169	17		(17)		—		—		—
Issuance of common stock related to stock purchase plan	15	1		1,900		—		—		1,901
Common stock repurchased and retired	(62)	(6)		(10,043)		—		(112)		(10,161)
Share-based compensation	—	—		13,915		—		—		13,915

Balances at August 31, 2020	25,328	$	2,533	$	274,643	$	(14,320)	$	1,045,673	$	1,308,529

Balances at May 31, 2019	25,101	$	2,510	$	249,079	$	(2,011)	$	786,601	$	1,036,179
Net income	—	—		—		—		46,095		46,095

Other comprehensive loss, net of tax	—	—		—		(2,744)		—		(2,744)
Exercise of stock options	27	2		1,805		—		—		1,807
Net issuance and settlement of restricted stock	5	1		(1)		—		—		—
Issuance of common stock related to stock purchase plan	—	—		—		—		—		—
Common stock repurchased and retired	(3)	—		(269)		—		(74)		(343)
Share-based compensation	—	—		6,381		—		—		6,381

Balances at August 31, 2019	25,130	$	2,513	$	256,995	$	(4,755)	$	832,622	$	1,087,375

Balances at February 28, 2019	24,946	$	2,495	$	246,585	$	1,191	$	746,366	$	996,637
Net income	—	—		—		—		86,789		86,789

Other comprehensive loss, net of tax	—	—		—		(5,946)		—		(5,946)
Exercise of stock options	62	6		3,627		—		—		3,633
Net issuance and settlement of restricted stock	178	18		(18)		—		—		—
Issuance of common stock related to stock purchase plan	15	1		1,407		—		—		1,408
Common stock repurchased and retired	(71)	(7)		(8,591)		—		(533)		(9,131)
Share-based compensation	—	—		13,985		—		—		13,985

Balances at August 31, 2019	25,130	$	2,513	$	256,995	$	(4,755)	$	832,622	$	1,087,375

See accompanying notes to condensed consolidated financial statements.

Table of Contents

HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)


	Six Months Ended August 31,
(in thousands)	2020		2019
Cash provided by operating activities:
Net income	$	147,619	$	86,789


Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	18,476		16,116
Amortization of financing costs	522		509
Non-cash operating lease expense	177		1,022
Provision for doubtful receivables	1,900		313
Non-cash share-based compensation	13,915		13,985

Loss (gain) on the sale or disposal of property and equipment	6		(13)
Deferred income taxes and tax credits	(535)		4
Changes in operating capital, net of effects of acquisition of businesses:
Receivables	(55,904)		(30,410)
Inventories	(90,094)		(68,576)
Prepaid expenses and other current assets	745		(2,333)
Other assets and liabilities, net	(2,147)		22,284
Accounts payable	127,813		23,124
Accrued expenses and other current liabilities	26,288		(20,418)
Accrued income taxes	(2,503)		(4,185)
Net cash provided by operating activities	186,278		38,211



Cash used by investing activities:
Capital and intangible asset expenditures	(15,237)		(8,861)

Net cash used by investing activities	(15,237)		(8,861)



Cash used by financing activities:
Proceeds from line of credit	765,200		283,400
Repayment of line of credit	(799,200)		(301,600)
Repayment of long-term debt	(1,900)		(1,900)
Payment of financing costs	(3,796)		—
Proceeds from share issuances under share-based compensation plans	2,748		5,041

Payments for repurchases of common stock	(10,161)		(9,131)
Net cash used by financing activities	(47,109)		(24,190)



Net increase in cash and cash equivalents	123,932		5,160
Cash and cash equivalents, beginning balance	24,467		11,871
Cash and cash equivalents, ending balance	$	148,399	$	17,031



Supplemental non-cash items not included above resulting from the adoption of ASC 842
Initial recognition of operating lease asset	$	—	$	(37,082)
Initial recognition of lease liabilities	—		47,223
Accrued expenses and other current liabilities	—		(2,873)
Other assets and liabilities, net	—		(7,311)
Prepaid expenses and other current assets	—		43

See accompanying notes to condensed consolidated financial statements.

Table of Contents

HELEN OF TROY LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

August 31, 2020

Price	138.29	EPS	5
Shares	25	P/E	29
MCap	3,491	P/FCF	30
Net Debt	303	EBIT	149
TEV	3,794	TEV/EBIT	25
TTM 2019-05-31, in MM, except price, ratios

10-Q	2020-08-31	Filed 2020-10-09
10-Q	2020-05-31	Filed 2020-07-10
10-K	2020-02-29	Filed 2020-04-29
10-Q	2019-11-30	Filed 2020-01-09
10-Q	2019-08-31	Filed 2019-10-10
10-Q	2019-05-31	Filed 2019-07-10
10-K	2019-02-28	Filed 2019-04-29
10-Q	2018-11-30	Filed 2019-01-09
10-Q	2018-08-31	Filed 2018-10-10
10-Q	2018-05-31	Filed 2018-07-10
10-K	2018-02-28	Filed 2018-04-30
10-Q	2017-11-30	Filed 2018-01-09
10-Q	2017-08-31	Filed 2017-10-10
10-Q	2017-05-31	Filed 2017-07-10
10-K	2017-02-28	Filed 2017-05-01
10-Q	2016-11-30	Filed 2017-01-09
10-Q	2016-08-31	Filed 2016-10-11
10-Q	2016-05-31	Filed 2016-07-11
10-K	2016-02-29	Filed 2016-04-29
10-Q	2015-11-30	Filed 2016-01-11
10-Q	2015-08-31	Filed 2015-10-13
10-Q	2015-05-31	Filed 2015-07-10
10-K	2015-02-28	Filed 2015-04-29
10-Q	2014-11-30	Filed 2015-01-09
10-Q	2014-08-31	Filed 2014-10-10
10-Q	2014-05-31	Filed 2014-07-10
10-K	2014-02-28	Filed 2014-04-29
10-Q	2013-11-30	Filed 2014-01-09
10-Q	2013-08-31	Filed 2013-10-10
10-K	2013-02-28	Filed 2013-04-29
10-Q	2012-11-30	Filed 2013-01-09
10-Q	2012-08-31	Filed 2012-10-10
10-Q	2012-05-31	Filed 2012-07-10
10-K	2012-02-29	Filed 2012-04-30
10-Q	2011-11-30	Filed 2012-01-06
10-Q	2011-08-31	Filed 2011-10-07
10-Q	2011-05-31	Filed 2011-07-11
10-K	2011-02-28	Filed 2011-05-16
10-Q	2010-11-30	Filed 2011-01-10
10-Q	2010-08-31	Filed 2010-10-06
10-Q	2010-05-31	Filed 2010-07-09
10-K	2010-02-28	Filed 2010-05-13
10-Q	2009-11-30	Filed 2010-01-11

8-K	2020-10-08	Earnings, Exhibits
8-K	2020-10-06	Officers
8-K	2020-08-26	Shareholder Vote
8-K	2020-07-09	Earnings, Exhibits
8-K	2020-05-14
8-K	2020-05-04
8-K	2020-04-28
8-K	2020-03-30
8-K	2020-03-17
8-K	2020-01-28
8-K	2020-01-23
8-K	2020-01-08
8-K	2019-12-19
8-K	2019-10-08
8-K	2019-08-23
8-K	2019-07-09
8-K	2019-06-21
8-K	2019-05-21
8-K	2019-04-26
8-K	2019-01-08
8-K	2018-11-07
8-K	2018-10-09
8-K	2018-08-22
8-K	2018-07-09
8-K	2018-04-26
8-K	2018-03-01
8-K	2018-01-24
8-K	2018-01-08

EX-31.1	fy21q2exhibit3111.htm
EX-31.2	fy21q2exhibit312.htm
EX-32	fy21q2exhibit321.htm

HELE 10Q Quarterly Report

Helen of Troy Earnings 2020-08-31