Helen of Troy (HELE) Tops Q2 EPS by $1.45, Revenues Beat; Defers FY21 Guidance Due to COVID-19

Helen of Troy (NASDAQ: HELE) reported Q2 EPS of $3.77, $1.45 better than the analyst estimate of $2.32. Revenue for the quarter came in at $530.85 million versus the consensus estimate of $439.89 million.

Executive Summary – Second Quarter of Fiscal 2021

• Consolidated net sales revenue increase of 28.2%, including:
  • An increase in Leadership Brand net sales of 30.3%
  • An increase in online channel net sales of approximately 32%
  • Organic business net sales growth of 25.7%
  • Core business net sales growth of 29.1%
• GAAP operating income of $99.3 million, or 18.7% of net sales, compared to $54.5 million, or 13.2% of net sales, for the same period last year
• Non-GAAP adjusted operating income increase of 64.9% to $108.5 million, or 20.4% of net sales, compared to $65.8 million, or 15.9% of net sales, for the same period last year
• GAAP diluted EPS of $3.43, compared to $1.83 for the same period last year
• Non-GAAP adjusted diluted EPS increase of 68.3% to $3.77, compared to $2.24 for the same period last year
• Net cash provided by operating activities for the first six months of the fiscal year of $186.3 million, compared to $38.2 million for the same period last year
• Non-GAAP free cash flow for the first six months of the fiscal year of $171.0 million, compared to $29.4 million for the same period last year

Julien R. Mininberg, Chief Executive Officer, stated: “We delivered outstanding results in the second quarter. Our diversified brand portfolio provided trusted solutions to consumers amidst the global pandemic and the devastating wildfires in the western United States. I am very proud of our associates around the world, who perform at an elevated level every day as the resilience of our business, organization, and culture continues to be tested and confirmed. Sales growth was 28.2% and adjusted diluted EPS growth was a robust 68.3% for the quarter. Our Leadership Brands performed extremely well, with sales growing 30.3%, including 3.2% growth from Drybar. All three of our business segments and international grew more than 20% in the quarter. Health & Home led the way with 33.1% Organic sales growth, propelled by its health-related Vicks, Braun, PUR, and Honeywell products that are there for consumers when they are needed most. Housewares Organic sales increased 20.2% with OXO continuing to thrive amid the home nesting trend, Hydro Flask returning to growth in the quarter, and excellent international growth for both brands. Organic Beauty sales grew 23.0% as our One-Step volumizer franchise grew sharply in the U.S. and Internationally. Drybar contributed an additional 12.1% sales growth to Beauty. The online channel continues to be a powerful growth driver as the pandemic accelerated consumer preference for clicks over bricks. Online sales grew 32% to now represent 24% of our total sales. All told, the first half of our fiscal year marked an excellent start to the second year of Phase II. First half sales grew 20.4%, adjusted diluted EPS grew 46.5%, and we generated $186 million of cash flow from operations.”

Mr. Mininberg concluded: “The combination of winning first half results and strong prospects for the remainder of the fiscal year allow us to plan further investment in our most important Phase II initiatives during the second half of our fiscal year. We are very pleased to be in a position to do so, as we believe these strategic investments will continue to power our multi-year transformation. While we are highly encouraged by the resiliency and strength of our business, the unpredictability of the pandemic’s impact on consumer demand, its strain on our supply chain and distribution capacity, and its impact on the effectiveness of brand spending continue to cause a high degree of forecast variability that makes us unable to provide financial guidance for fiscal 2021 within a reasonable range at this time. As we navigate the uncertainty of the current environment, we will continue to focus on longer-term opportunities to continue driving our value creation flywheel.”

For earnings history and earnings-related data on Helen of Troy (HELE) click here.

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