Helen of Troy (HELE) Tops Q3 EPS by 74c, Revenues Beat; Offers FY21 EPS/Revenue Guidance Above Consensus

Helen of Troy (NASDAQ: HELE) reported Q3 EPS of $3.76, $0.74 better than the analyst estimate of $3.02. Revenue for the quarter came in at $637.74 million versus the consensus estimate of $551.85 million.

Julien R. Mininberg, Chief Executive Officer, stated: “Our business delivered an exceptional third quarter in what is shaping up to be another year of outstanding results for Helen of Troy. We delivered 34.3% growth in consolidated net sales behind continued momentum across each of our business segments, our Leadership Brands, the online channel, brick and mortar, organic business, core business, and international. During the quarter, adjusted EPS grew 20.5%, even as we invested in key initiatives designed to continue driving our value creation flywheel for next fiscal year and for the back half of Phase II. Year to date, we have outstanding momentum, with consolidated net sales growth of 25.6%, adjusted EPS growth of 35.4%, and growth in cash flow from operations of 146.3% to $249.7 million. We are very pleased to deliver these results and now provide full fiscal year guidance projecting that Helen of Troy will cross the $2 billion sales milestone for the first time and grow its adjusted EPS by $2.20 per share or more this year. This is tremendous progress in our second year of Phase II, and well ahead of the five-year glidepath we laid out during our May 2019 Investor Day. The strength of our execution is a testament to our exceptional associates around the world who continue to thrive as we rise together to overcome the many challenges of COVID-19, live our culture, and build for the future.”

Mr. Mininberg concluded: “We are excited to be in a position this fiscal year to use the strength of our results and balance sheet to make long-term investments needed to catch up with our rapid growth over the past several years and to invest in the building blocks and capabilities we believe will create incremental revenue and earnings growth during the rest of Phase II. We like our chosen initiatives, remain clearly focused on leveraging our diversified portfolio and expect to continue to develop additional opportunities to further supplement future earnings growth as we head into fiscal 2022.”

GUIDANCE:

Helen of Troy sees FY2021 EPS of $11.50-$11.70, versus the consensus of $11.10. Helen of Troy sees FY2021 revenue of $2.075-2.1 billion, versus the consensus of $1.99 billion.

Fiscal 2021 Annual Outlook

For fiscal 2021, the Company expects consolidated net sales revenue in the range of $2.075 to $2.1 billion, which implies consolidated sales growth of 21.5% to 23.0%.

The Company’s net sales outlook reflects the following expectations by segment:

• Housewares net sales growth of 12.0% to 12.5%;
• Health & Home net sales growth of 27.5% to 30.0%; and
• Beauty net sales growth of 27.0% to 28.0%.

The Company expects consolidated GAAP diluted EPS of $10.29 to $10.46 and non-GAAP adjusted diluted EPS in the range of $11.50 to $11.70, which excludes any asset impairment charges, restructuring charges, tax reform, share-based compensation expense and intangible asset amortization expense.

The Company’s net sales and EPS growth outlook reflects the following:

• the assumption that COVID-19 related demand trends seen in the second and third quarters of fiscal 2021 continue through the fourth quarter;
• the assumption that the impact of the cough/cold/flu season on the fourth quarter will be below average due to the COVID-19 impact on back to school, work from home, travel, brick and mortar shopping, and group gatherings, compared to an above average impact in the same period last year;
• the more difficult comparison to the fourth quarter of fiscal 2020, which included initial COVID-19 demand surges in the Health & Home segment and an initial surge in demand for the One-Step family of products in the Beauty segment;
• an estimated increase in short- and long-term growth investments of approximately 50% for the full fiscal year 2021, which falls entirely in the second half of the year due to cost reduction initiatives in place during the first half of the year;
• the assumption that December 2020 foreign currency exchange rates will remain constant for the remainder of the fiscal year; and
• an estimated weighted average diluted shares outstanding of 25.3 million.

The Company expects a reported GAAP effective tax rate range of 6.7% to 6.8%, and an adjusted effective tax rate range of 9.5% to 9.7% for the full fiscal year 2021. Please refer to the schedule entitled “Effective Tax Rate (GAAP) and Adjusted Effective Tax Rate (Non-GAAP)” in the accompanying tables to this press release.

The Company expects capital asset expenditures of $32 to $35 million for the full fiscal year 2021, which includes expected initial expenditures related to a new 2 million square foot distribution facility with state of the art automation for our Housewares segment. The Company expects intangible asset expenditures of $74 to $75 million, which includes the $72.5 million incurred in December related to the Revlon License agreement.

The likelihood and potential impact of any fiscal 2021 acquisitions and divestitures, future asset impairment charges, future foreign currency fluctuations, or further share repurchases are unknown and cannot be reasonably estimated; therefore, they are not included in the Company’s sales and earnings outlook.

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

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