Accretive to adjusted EBITDA, adjusted EPS, and gross profit margin
Third consecutive acquisition in Health & Wellness categories in less
than four years
Helen of Troy to hold a conference call at 9 a.m. ET today; details
at end of release
EL PASO, Texas--(BUSINESS WIRE)--Jun. 11, 2014--
Helen of Troy Limited (NASDAQ:HELE), designer, developer and worldwide
marketer of brand-name housewares, healthcare/home environment and
personal care consumer products, announced that it has entered into a
definitive purchase agreement to acquire Healthy Directions, LLC and its
subsidiaries (Healthy Directions), a U.S. market leader in premium
doctor-branded vitamins, minerals and supplements (VMS), as well as
other health products sold directly to consumers. The purchase price
will be approximately $195 million in cash, subject to certain customary
closing adjustments. The sellers are certain funds controlled by
American Securities, LLC and ACI Capital Co., LLC. On a trailing twelve
month basis through March 2014, the acquisition implies a multiple of
less than 8.0 times adjusted EBITDA. Following the closing of the
acquisition, Healthy Directions will continue to be based in Bethesda,
Maryland.
The acquisition is expected to be accretive on a cash flow, adjusted
EBITDA and adjusted EPS basis. With net sales of approximately $145
million in calendar year 2013, Healthy Directions is expected to
increase Helen of Troy’s revenues by more than 10% on an annualized
basis. Healthy Directions grew 8.4% in 2013 compared to 2012, ahead of
the industry trend in the VMS market.
Entering the VMS category is a logical step for Helen of Troy as it
continues to capitalize on the health and wellness trend, which builds
on Helen of Troy’s acquisitions of Kaz in December of 2010 and PUR in
December of 2011. Healthy Directions’ portfolio of supplements and
health care products is branded with the names of highly respected
physicians and nutritional experts in attractive product segments such
as heart health, digestive health, joint health, skin care, and vision
support. It has a strong, innovation pipeline and an advantageous direct
marketing and delivery capability, which encourages consumer education
and automatic replenishment. According to Nutrition Business Journal,
the VMS market is expected to continue growing at a mid-to-high single
digit rate annually through 2020. Healthy Directions, which targets
consumers aged 55+, expects to benefit from the aging of the U.S.
population with over 70% of those aged 55+ taking vitamin supplements in
2013. According to the U.S. Census Bureau’s national population
forecast, the 65-74 age segment is expected to grow more than 50%
between 2012 and 2025, and the segment of age 75+ is expected to grow
more than 40%.
Tim Meeker, Chairman of the Board, commented: “We are delighted to
announce the acquisition of Healthy Directions. This acquisition fits
well with our stated goal to invest our cash flow for the benefit of
shareholders. Helen of Troy has significant balance sheet strength,
which enables it to support its current brands and businesses, evaluate
strategic acquisitions, and repurchase outstanding shares. We have been
searching for the right acquisition for over two years and believe
Healthy Directions is a strong fit for us both strategically and
financially. Following the acquisition, Helen of Troy will continue to
have an attractive debt to adjusted EBITDA ratio of less than 3.0 times
and a strong cash flow generation profile.”
Julien R. Mininberg, Chief Executive Officer, stated: “The heart of our
acquisition strategy is to create value for our shareholders by adding
growing businesses that are good strategic fits with our portfolio.
Healthy Directions will add another strong pillar to our growing
portfolio of market-leading health and wellness businesses that includes
thermometers, humidifiers, vaporizers, air purifiers, and water
purifiers. Healthy Directions is poised to continue capitalizing on the
expected growth in its market. It has a substantial presence in the
premium direct-to-consumer VMS category, a proven track record of growth
over the past three years, and initiatives in place to continue its
momentum. We also like Healthy Directions’ direct-to-consumer business
model, which drives growth by focusing on education, replenishment, and
customer loyalty with a wide range of high-quality products and programs
designed to drive repeat purchases. Healthy Directions’
direct-to-consumer marketing platform also provides a new capability at
Helen of Troy, reaching consumers directly through the internet, phone
and direct mail, diversifying our go-to-market vehicles, as opposed to
primarily brick and mortar retail and online retailers in our other
businesses.”
Mininberg continued, “Healthy Directions marks our third acquisition in
less than four years, and is strongly aligned with our disciplined
financial criteria. We are acquiring expected revenue growth rates and
gross profit margins above our organic averages, and strong new cash
flow at an attractive price. Healthy Directions’ gross profit margin in
calendar year 2013 was approximately 30 percentage points higher than
Helen of Troy’s consolidated fiscal year 2014 gross profit margin,
advancing our strategy of favoring businesses with high-margin
consumables. The cash flow accretion from Healthy Directions helps us
continue to keep our balance sheet strong so we can allocate capital to
accelerate value creation for our shareholders. We will continue to
evaluate acquisition opportunities across a wide range of categories and
geographies. The continuity of Healthy Directions’ management team is a
key ingredient, as our recently-announced shared service reorganization
continues to transform other areas of our Company and allows our
business segments to remain focused on delivering innovative products
that drive sales at increasing rates of profitability. I would like to
take this opportunity to welcome the entire Healthy Directions team to
the Helen of Troy family.”
Connie Hallquist, Chief Executive Officer of Healthy Directions, stated:
“We are very excited to join the Helen of Troy family. We admire the
portfolio of businesses Helen of Troy has built, its consistent growth
and profitability, and are eager to become a part of the Company. Our
brands and products will benefit from greater access to capital, strong
back office capability, a developed international platform, and other
health and wellness businesses that may benefit from our business model
over time. I look forward to continuing to lead Healthy Directions as
part of Helen of Troy and believe our growth prospects will be even
greater in the years ahead.”
The transaction is expected to close during Helen of Troy’s second
fiscal quarter, subject to customary closing conditions, including
regulatory approval.
J.P. Morgan Securities LLC acted as an exclusive financial advisor to
Helen of Troy Limited on the acquisition of Healthy Directions.
Additionally, JPMorgan Chase Bank, N.A. and Bank of America, N.A.
provided committed financing for the transaction. Houlihan Lokey served
as exclusive financial advisor and assisted in structuring and
negotiating the transaction on behalf of Healthy Directions. Baker &
McKenzie LLP acted as legal counsel to Helen of Troy Limited in
connection with the transaction. Kaye Scholer LLP acted as legal counsel
to Healthy Directions.
Conference Call and Webcast:
The Company will conduct a teleconference in conjunction with today's
acquisition. The teleconference begins at 9:00 a.m. Eastern Time today,
Wednesday, June 11th, 2014. Institutional investors and analysts
interested in participating in the call are invited to dial (888)
430-8694 approximately ten minutes prior to the start of the call. The
conference call will also be webcast live at: www.hotus.com.
A telephone replay of this call will be available at 12:00 p.m. Eastern
Time on June 11, 2014 until 11:59 p.m. Eastern Time on June 18, 2014 and
can be accessed by dialing (877) 870-5176 and entering replay pin number
1070217.
A replay of the webcast will remain available on the website for 60 days.
About Helen of Troy Limited:
About Helen of Troy Limited: Helen of Troy Limited is a leading
global consumer products company offering creative solutions for its
customers through a strong portfolio of well-recognized and
widely-trusted brands, including: Housewares: OXO®, Good
Grips®, Soft Works®, OXO tot® and OXO Steel®; Healthcare/Home
Environment: Vicks®, Braun®, Honeywell®, PUR®, Febreze®,
Stinger®, Duracraft® and SoftHeat®; and Personal Care:
Revlon®, Vidal Sassoon®, Dr. Scholl's®, TONI&GUY®, Sure®, Pert®,
Infusium23®, Brut®, Ammens®, Hot Tools®, Bed Head®, Karina®, Sea Breeze®
and Gold 'N Hot®. The Honeywell® trademark is used under license from
Honeywell International Inc. The Vicks®, Braun®, Febreze® and Vidal
Sassoon® trademarks are used under license from The Procter & Gamble
Company. The Revlon® trademark is used under license from Revlon
Consumer Products Corporation. The Bed Head® trademark is used under
license from Unilever PLC. The Dr. Scholl's® trademark is used under
license from MSD Consumer Care, Inc.
For in-depth information about Helen of Troy, please visit www.hotus.com.
About Healthy Directions
Healthy Directions, LLC, a direct-to-consumer retailer and leading
health publisher of doctor-formulated nutritional
supplements and skincare
products, is dedicated to helping people lead healthier, happier
lives. Healthy Directions provides expert guidance and advanced
nutritional supplements from some of America’s most knowledgeable and
highly respected integrative- and alternative-health doctors including Julian
Whitaker, MD, Dr.
David Williams, Stephen
Sinatra, MD, Aaron
Tabor, MD, Susan Lark, MD, Richard
Wurtman, MD, and Joseph
Pergolizzi, Jr., MD.
Non-GAAP Financial Measures:
Adjusted EBITDA and adjusted EPS are considered non-GAAP financial
measures. Adjusted EBITDA is defined as earnings before interest,
taxes, depreciation, amortization, non-cash asset impairment charges and
non-cash share based compensation. Adjusted EPS is defined as
earnings per share excluding transaction costs and amortization of
intangible assets related to the acquisition.
Forward Looking Statements:
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", "estimates", "believes", "expects",
"plans", "may", "will", "should", "seeks", "project", "predict",
"potential", "continue", "intends", 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 28, 2014 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. Such risks include, among
others, the departure and recruitment of key personnel, the Company's
ability to deliver products to our customers in a timely manner, the
costs of complying with the business demands and requirements of large
sophisticated customers, the Company's relationship with key customers
and licensors, our dependence on the strength of retail economies and
vulnerabilities to an economic downturn, expectations regarding
acquisitions and the integration of acquired businesses, exchange
rate risks, disruptions in U.S., European and other international credit
markets, risks associated with weather conditions, the Company’s
dependence on foreign sources of supply and foreign manufacturing, the
impact of changing costs of raw materials and energy on cost of goods
sold and certain operating expenses, the Company's geographic
concentration of certain U.S. distribution facilities, which increases
our exposure to significant shipping disruptions and added shipping and
storage costs, difficulties encountered during the transition to the
Company’s new distribution facility could interrupt the Company’s
logistical systems and cause shipping disruptions, the Company's
projections of product demand, sales, net income and earnings per share
are highly subjective and our future net sales revenue and net income
could vary in a material amount from such projections, circumstances
that may contribute to future impairment of goodwill, intangible or
other long-lived assets, the risks associated with the use of trademarks
licensed from and to third parties, the Company's ability to develop and
introduce innovative new products to meet changing consumer preferences,
trade barriers, exchange controls, expropriations, and other risks
associated with foreign operations, the Company’s debt leverage and the
constraints it may impose, the costs, complexity and challenges of
upgrading and managing our global information systems, the risks
associated with information security breaches, the risks associated with
tax audits and related disputes with taxing authorities, potential
changes in laws, including tax laws, and the Company's ability to
continue to avoid classification as a controlled foreign corporation.
Source: Helen of Troy Limited
Investor Contacts:
ICR, Inc.
Allison Malkin / Anne Rakunas
203-682-8200
/ 310-954-1113