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Hydro Flask Aids Parent Co. to 1.9% Sales Growth in its Q3

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Helen of Troy Limited, the parent company of Hydro Flask and a, designer, developer and worldwide marketer of consumer brand-name housewares, health and home and beauty products, today reported results for the three-month period ended November 30, 2017.

Here are selected portions of its earning release focusing on results for the overall company and Hydro Flask.

Third quarter fiscal 2018 GAAP results include pre-tax non-cash asset impairment charges of $82.2 million associated with the Company’s Nutritional Supplements segment and $1.3 million in restructuring charges related to our restructuring plan, Project Refuel, with no comparable charges in the same period last year.

Consolidated net sales revenue increase of 1.9%, including:

  • An increase in Leadership Brand net sales of approximately 6.4%
  • An increase in online channel net sales of approximately 18.6%
  • GAAP operating loss of $(15.6) million, or (3.4)% of net sales, which includes $82.2 million in non-cash pre-tax asset impairment charges and $1.3 million in restructuring charges, compared to operating income of $63.3 million, or 14.2% of net sales, in the same period last year
  • Non-GAAP adjusted operating income growth of 7.5% to $79.0 million, or 17.4% of net sales, which excludes the impairment and restructuring charges mentioned above, compared to $73.4 million, or 16.5% of net sales in the same period last year
  • Effective tax rate of (58.4)% compared to 3.7% in the same period of the prior year, driven by the impact of impairment charges on the tax provision
  • GAAP diluted loss per share of $(1.12), which includes $3.30 per share in impairment and restructuring charges mentioned above, compared to diluted earnings per share (“EPS”) of $2.07 in the same period last year with no comparable charges in the prior year
  • Non-GAAP adjusted diluted earnings per share growth of 6.3% to $2.52, compared to $2.37 in the same period last year
  • Repurchased 311,100 shares of common stock in the open market during the quarter for $29.2 million

Julien R. Mininberg, Chief Executive Officer, stated: “We achieved solid results in the third quarter, with consolidated sales growth of 1.9% driven primarily by new product introductions, incremental distribution, and growth in international sales. Our Leadership Brands (including Hydro Flask) continue to perform well, gaining 6.4% with each of the seven growing during the quarter.

OUR SPONSORS

"Growth in the online channel continued to be a key driver, gaining 18.6% to now represent 17.4% of total sales for the third quarter. We drove gross margin expansion through a better mix of higher-margin sales, and increased consolidated adjusted operating margin as we benefitted from greater efficiencies from our shared services platform, even as we continued to invest in our brand portfolio and digital capabilities.

"Our Health & Home and Housewares (including Hydro Flask) segments led sales growth in the quarter, and both segments achieved higher adjusted operating margins compared to the prior year period."

Mr. Mininberg continued: “We are pleased with our accomplishments this fiscal year to date, which are the result of solid execution against our clear and focused strategies. We achieved overall sales growth of 2.6%, including growth in our Leadership Brands (including Hydro Flask) of 7.3%, improved profitability, and delivered adjusted diluted EPS growth of 12.1%.

"We also reduced inventory by over 5% year over year as we continue to benefit from the improved operating efficiencies that are so important to our overall transformation plan.

"We are therefore increasing our fiscal 2018 adjusted diluted EPS outlook range for continuing operations. We continue to prudently invest behind those brands, channels and categories that provide the best opportunities to drive growth and further improve profitability. We believe these disciplined investments in product innovation, marketing, and digital initiatives will position our company for continued long-term shareholder value creation."

OUR SPONSORS

Housewares net sales increased by 2.6% reflecting an increase in online channel sales, incremental distribution with existing customers, international growth, and new product introductions for both Hydro Flask and OXO brands.

This growth was partially offset by the unfavorable impact of lower store traffic and soft consumer spending at traditional brick and mortar retail, and the unfavorable comparative impact of strong sales into the club channel in the same period last year. S

egment net sales also benefitted from the favorable impact of net foreign currency fluctuations of approximately $0.2 million, or 0.2%.

GAAP operating margin was unchanged at 23.4%. Adjusted operating margin increased 0.5 percentage points primarily due to lower incentive compensation expense and the impact of increased operating leverage from net sales growth, partially offset by higher marketing, advertising and new product development expense.
 

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