EL PASO, Texas, Jan. 8 /PRNewswire-FirstCall/ -- Helen of Troy Limited
(Nasdaq: HELE), designer, developer and worldwide marketer of brand-name
personal care and household consumer products, today reported sales and net
earnings for the third quarter ended November 30, 2008.
Third quarter sales were $185,619,000 versus sales of $210,348,000 in the
same period of the prior year, a decline of 11.8 percent. Sales for the nine
months ended November 30, 2008 were $484,165,000 versus sales of $508,442,000
for the previous year, a decline of 4.8 percent. The decline in sales reflects
the impact of the deteriorating global economic conditions on the retail
consumer, a compressed and highly promotional holiday shopping season in the
United States, and the strengthening of the U.S. Dollar against other
currencies in which we transact sales, which results in comparatively less
reported U.S. Dollar sales.
Third quarter net earnings were $15,090,000, or $0.48 per fully diluted
share, compared to $22,842,000 or $0.73 per fully diluted share for the same
period a year earlier. Net earnings for the quarter were negatively impacted
by foreign exchange losses that reduced year-over-year quarterly earnings by
$5.0 million. Net earnings were positively impacted by the settlement of our
U.S. Internal Revenue Service tax audit for fiscal year 2005, which resulted
in a benefit to tax expense of $461,000 for the quarter ended November 30,
2008.
For the third quarter, sales in our Housewares segment decreased 4.3
percent to $45,301,000 compared with $47,356,000 for the same period last
year. Housewares third quarter sales were impacted by the factors previously
mentioned and the liquidation of Linens 'n Things during the quarter which
resulted in a loss of sales to this customer. In addition, we also believe it
negatively impacted other competing retailers by diverting consumer purchases
to Linens 'n Things deeply discounted merchandise. Net sales in the
Housewares segment for the nine month period ended November 30, 2008 increased
9.0 percent to $130,907,000 compared with $120,136,000 for the same period
last year.
Net sales in the Personal Care segment for the third quarter decreased
13.9 percent to $140,318,000 compared with $162,992,000 for the same period
last year. Net sales in the Personal Care segment for the nine month period
ended November 30, 2008 decreased 9.0 percent to $353,258,000 compared with
$388,306,000 for the same period last year.
Gerald J. Rubin, Chairman, Chief Executive Officer and President,
commenting on the results for the quarter and the first nine months of the
fiscal year stated, "We believe that recent credit market instability,
extraordinary stock market volatility, increases in unemployment rates and the
uncertainty regarding the impact and extent of U.S. government intervention on
behalf of the financial services and automotive sectors has fueled consumer
uncertainty. We believe these factors, along with the Linens 'n Things
liquidation and the impact of foreign currency fluctuations, have adversely
affected sales in our consumer markets for both the quarter and year-to-date.
"Selling, general, and administrative expense ("SG&A") as a percentage of
net sales for the fiscal quarter ended November 30, 2008 increased 0.6
percentage points to 28.8 percent compared to 28.2 percent for the same period
last year. SG&A expense as a percentage of net sales for the nine months
decreased 0.1 percentage points to 30.9 percent compared to 31.0 percent for
the same period last year. Foreign currency exchange losses recorded in SG&A
for the quarter and the nine months ending November 30, 2008, were $4.59
million and $4.93 million, respectively, compared to gains of $0.74 million
and $1.25 million, respectively, for the comparable three and nine month
periods of the prior year. Excluding the impact of these foreign exchange
losses and gains, bad debt expense, and insurance claim gains for the quarter
and same period last year, SG&A as a percentage of net sales for the fiscal
quarter ended November 30, 2008 decreased 2.3 percentage points to 26.1
percent, compared to 28.4 percent for the same period last year. Excluding the
impact of these same items, for the nine month periods ended November 30, 2008
and 2007, SG&A as a percentage of net sales decreased 1.9 percentage points to
29.3 percent compared to 31.2 percent for the same period last year,
demonstrating the success of our cost savings initiatives implemented during
the quarter and year-to-date.
"As of November 30, 2008, Helen of Troy's balance sheet remains strong
with stockholders' equity of $598.6 million, an increase of $35.7 million, or
6.3 percent from the comparable period last year. Our November 30, 2008 book
value per outstanding share is $19.86. Our cash, temporary investment, trading
securities and long term investment position as of November 30, 2008 was $108
million versus $87.1 million at November 30, 2007. On February 28, 2009, cash
and long term investment are estimated to be $150 million, or approximately
$5.00 per outstanding share. On February 28, 2010, assuming no acquisitions,
cash and long term investments should be approximately equal to short and long
term debt. In December 2008 we amended our $50 million revolving credit
agreement which extended the maturity date from June 1, 2009 to December 15,
2013 and adjusted certain other terms. During the third quarter we have
repurchased 93,333 common shares of Helen of Troy Limited for $1.38 million,
or an average purchase price of $14.78 per share.
"We continue to review and adjust our business activities to address a
rapidly evolving economic environment, while managing liquidity and continuing
to control expenses. During this difficult period we believe we are well
positioned financially to continue to seek prudent opportunities to grow our
business. Our efforts will be to continue our focus on expense reductions
while striving to increase sales and gross margins with new product
introductions scheduled to debut at the International Housewares Show in
Chicago, Illinois on March 22, 2009. We expect the retail environment to
continue to be challenging as we continue to execute our strategic initiatives
with renewed effort and dedication, and implement our plans for the year
ahead. We believe our consumer brand leadership positions in our market
segments will be the basis for our continued growth and success," Mr. Rubin
concluded.
The Company will conduct a teleconference in conjunction with today's
release. The teleconference begins at 11 a.m. ET today, Thursday, January 8,
2009. Members of the news media, investors and the general public are invited
to access a live broadcast of the conference call via the Investor Relations
page of the Company's website at http://www.hotus.com. The event will be
archived and available for replay through February 28, 2009.
Helen of Troy Limited is a leading designer, producer and global marketer
of brand-name personal care and household consumer products. The Company's
personal care products include hair dryers, curling irons, hair setters,
women's shavers, brushes, combs, hair accessories, home hair clippers,
mirrors, foot baths, body massagers, paraffin baths, liquid hair styling
products, body powder and skin care products. The Company's household products
include kitchen tools, cutlery, bar and wine accessories, household cleaning
tools, tea kettles, trash cans, storage and organization products, gardening
tools, kitchen mitts and trivets, barbeque tools, and rechargeable lighting
products. The Company's products are sold to consumers by mass merchandisers,
drug chains, warehouse clubs and grocery stores under licensed trademarks
including Vidal Sassoon(R), licensed from The Procter & Gamble Company,
Revlon(R), licensed from Revlon Consumer Products Corporation, Dr.
Scholl's(R), licensed from Schering-Plough HealthCare Products, Inc.,
Sunbeam(R), Health at Home(R) and Health o meter(R) licensed from Sunbeam
Products, Inc., Sea Breeze(R), licensed from Shiseido Company Ltd.,
Vitapointe(R), licensed from Sara Lee Household and Body Care UK Limited, Toni
& Guy(R) outside of the Americas, licensed from Mascolo Limited, Bed Head(R)
and TIGI(R) in the Americas licensed from MBL/TIGI Products, LP, and
Toni&Guy(R) in the Americas licensed from MBL/TONI&GUY Products, LP. Helen of
Troy's owned brands include OXO(R), Good Grips(R), Candela(R), Brut(R),
Vitalis(R), Final Net(R), Ammens(R), Condition(R) 3-in-1, SkinMilk(R),
Dazey(R), Caruso(R), Karina(R), DCNL(R), Nandi(R), Isobel(R) and Ogilvie(R).
The Company markets hair and beauty care products under the Helen of Troy(R),
Hot Tools(R), Hot Spa(R), Salon Edition(R), Gallery Series(R), Wigo(R), Fusion
Tools(R), Belson(R), Belson Pro(R), Gold 'N Hot(R), Curlmaster(R),
Profiles(R), Comare(R), Mega Hot(R), and Shear Technology(R) owned brands to
the professional beauty salon industry.
The Company reports and discusses its operating results using financial
measures consistent with generally accepted accounting principles ("GAAP").
To supplement its presentation, the Company discloses certain financial
measures that may be considered non-GAAP financial measures, such as non-GAAP
earnings, EBITDA, EBITDA before impairment and non-GAAP SG&A which are
presented in this press release. The following tables present a reconciliation
of these financial measures to their corresponding GAAP based measures
presented in the Company's consolidated condensed statements of income.
This press release may contain forward-looking statements, which are
subject to change. The forward-looking statements are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act of
1995. Any or all of the forward-looking statements may turn out to be wrong.
They can be affected by inaccurate assumptions or by known or unknown risks
and uncertainties. Many of these factors will be important in determining the
Company's actual future results. Consequently, no forward-looking statement
can be guaranteed. Actual future results may vary materially from those
expressed or implied in any forward-looking statements. The forward-looking
statements are qualified in their entirety by a number of risks that could
cause actual results to differ materially from historical or anticipated
results. Generally, the words "anticipates", "believes", "expects" and other
similar words identify forward-looking statements. The Company cautions
readers not to place undue reliance on forward-looking statements. The
Company intends its forward-looking statements to speak only as of the time of
such statements, and does not undertake to update or revise them as more
information becomes available. 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 29, 2008 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.
HELEN OF TROY LIMITED AND SUBSIDIARIES
Consolidated Condensed Statements of Income
(Unaudited)
(in thousands, except per share data)
Quarter Ended November 30,
2008 2007
Net sales $185,619 100.0% $210,348 100.0%
Cost of sales 112,075 60.4% 120,280 57.2%
Gross profit 73,544 39.6% 90,068 42.8%
Selling, general, and administrative
expense 53,543 28.8% 59,387 28.2%
Operating income before impairment
charges and gain on sale of land 20,001 10.8% 30,681 14.6%
Impairment charges - 0.0% 4,983 2.4%
Gain on sale of land - 0.0% (3,609) -1.7%
Operating income 20,001 10.8% 29,307 13.9%
Other income (expense):
Interest expense (3,380) -1.8% (3,603) -1.7%
Other income, net 575 0.3% 741 0.4%
Total other income (expense) (2,805) -1.5% (2,862) -1.4%
Earnings before income taxes 17,196 9.3% 26,445 12.6%
Income tax expense (benefit) 2,106 1.1% 3,603 1.7%
Net earnings $15,090 8.1% $22,842 10.9%
Diluted earnings per share $0.48 $0.73
Weighted average common shares used in
computing diluted earnings per share 31,229 31,296
Nine Months Ended November 30,
2008 2007
Net sales $484,165 100.0% $508,442 100.0%
Cost of sales 282,456 58.3% 290,130 57.1%
Gross profit 201,709 41.7% 218,312 42.9%
Selling, general, and administrative
expense 149,428 30.9% 157,832 31.0%
Operating income before impairment
charges and gain on sale of land 52,281 10.8% 60,480 11.9%
Impairment charges 7,760 1.6% 4,983 1.0%
Gain on sale of land - 0.0% (3,609) -0.7%
Operating income 44,521 9.2% 59,106 11.6%
Other income (expense):
Interest expense (10,317) -2.1% (11,536) -2.3%
Other income, net 2,244 0.5% 2,216 0.4%
Total other income (expense) (8,073) -1.7% (9,320) -1.8%
Earnings before income taxes 36,448 7.5% 49,786 9.8%
Income tax expense (benefit) 5,202 1.1% (1,426) -0.3%
Net earnings $31,246 6.5% $51,212 10.1%
Diluted earnings per share $1.00 $1.60
Weighted average common shares used in
computing diluted earnings per share 31,162 31,924
HELEN OF TROY LIMITED AND SUBSIDIARIES
Selected Consolidated Balance Sheet Information
(Unaudited)
(in thousands)
11/30/2008 11/30/2007
Cash, trading securities and temporary
investments $87,978 $87,112
Accounts receivable 142,891 162,722
Inventory 171,724 146,413
Total current assets 422,779 417,476
Long-term investments 20,048 -
Total assets 948,734 935,332
Total current liabilities 208,995 149,205
Total long term liabilities 141,130 223,233
Stockholders' equity 598,609 562,894
SELECTED OTHER DATA (in thousands)
Reconciliation of Non-GAAP Financial Measure - EBITDA (Earnings Before
Interest, Taxes, Depreciation and Amortization) to Net Earnings
Quarter Ended Nine Months Ended
November 30, November 30,
2008 2007 2008 2007
Net earnings $15,090 $22,842 $31,246 $51,212
Interest income / Expense, net 2,688 2,845 7,931 9,221
Income tax expense (benefit) 2,106 3,603 5,202 (1,426)
Depreciation and amortization 3,534 3,634 10,604 10,785
EBITDA (Earnings before interest,
taxes, depreciation and amortization) $23,418 $32,924 $54,983 $69,792
EBITDA before impairment charges,
share-based compensation, charge to
allowance for doubtful accounts, gain
on sale of land and gain on casualty
insurance settlements
EBITDA, as calculated above $23,418 $32,924 $54,983 $69,792
Add: Impairment charges - 4,983 7,760 4,983
Share-based compensation 377 275 1,037 821
Charge to allowance for
doubtful accounts - - 3,876 -
Less: Gain on sale of land - (3,609) - (3,609)
Gain on casualty insurance
settlements - - (2,702) -
EBITDA before impairment charges,
share-based compensation, charge to
allowance for doubtful accounts, gain
on sale of land and gain on casualty
insurance settlements $23,795 $34,573 $64,954 $71,987
SELECTED OTHER DATA (in thousands, except per share data)
Reconciliation of Net Earnings, as reported to Net Earnings without
impact of Significant Items
Quarter Ended November 30,
2008 2007
Diluted Diluted
EPS EPS
Net earnings, as reported $15,090 $0.48 $22,842 $0.73
Add: Impairment loss, net of related
income tax benefit - - 4,883 0.16
Reserve on accounts receivable,
net of related income tax benefit - - - -
Less: Gain on casualty insurance
settlements, net of related
income tax expense - - - -
Gain on sale of land, net of
related income tax expense - - (2,245) (0.07)
Tax benefit of HK IRD
settlement, including
interest income and reversal
of penalties - - - -
Tax benefit of IRS settlement,
including reversal of penalties (461) (0.01) - -
Net earnings, without significant
items $14,629 $0.47 $25,480 $0.81
Weighted average common shares used
in computing diluted earnings per
share 31,229 31,296
Nine Months Ended November 30,
2008 2007
Diluted Diluted
EPS EPS
Net earnings, as reported $31,246 $1.00 $51,212 $1.60
Add: Impairment loss, net of related
income tax benefit 7,605 0.24 4,883 0.15
Reserve on accounts receivable,
net of related income tax
benefit 2,516 0.08
Less: Gain on casualty insurance
settlements, net of related
income tax expense (2,635) (0.08) - -
Gain on sale of land, net of
related income tax expense - - (2,245) (0.07)
Tax benefit of HK IRD
settlement, including
interest income and reversal of
penalties - - (7,950) (0.25)
Tax benefit of IRS settlement,
including reversal of penalties (461) (0.01) - -
Net earnings, without significant
items $38,271 $1.23 $45,900 $1.44
Weighted average common shares used
in computing diluted earnings per
share 31,162 31,924
SELECTED OTHER DATA (in thousands)
Reconciliation of SG&A as reported to SG&A without impact of Specified
Items
Quarter Ended November 30,
2008 2007
SG&A, as reported $53,543 28.8% $59,387 28.2%
Insurance claim gains 47 0.0% - 0.0%
Bad debt expense (638) -0.3% (412) -0.2%
Foreign exchange (losses) gains (4,587) -2.5% 744 0.4%
SG&A, without specified items $48,365 26.1% $59,719 28.4%
Nine Months Ended November 30,
2008 2007
SG&A, as reported $149,428 30.9% $157,832 31.0%
Insurance claim gains 2,831 0.6% - 0.0%
Bad debt expense (5,245) -1.1% (276) -0.1%
Foreign exchange (losses) gains (4,928) -1.0% 1,250 0.2%
SG&A, without specified items $142,086 29.3% $158,806 31.2%
The above tables of SELECTED OTHER DATA and the accompanying press release
include non-GAAP measures. Non-GAAP EBITDA and EBITDA before impairment,
Non-GAAP earnings, which excludes specified significant items and SG&A without
specified items 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 Income in
the accompanying 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. The Company believes that these non-GAAP measures, in
combination with the Company's financial results calculated in accordance with
GAAP, provides investors with additional perspective. 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 period 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.
SOURCE Helen of Troy Limited
CONTACT: Robert D. Spear, Senior Vice President and CIO of Helen of Troy
Limited, +1- 915-225-4748/
/Web site: http://www.hotus.com /
(HELE)