Helen of Troy (NASDAQ: HELE) earnings release review for the 2nd quarter of their 2021 fiscal year
Category: Stock Market and Helen of Troy (HELE)
Date: 10 October 2020 Stock Price of Helen of Troy: $198.11 We take a look at the 2nd quarter earnings report of their 2021 fiscal year of Helen of Troy, a global consumer products company whose brands include Vicks, Hydro flask, OXO and Braun. The group saw their turnover increase by 28.2% compared to the same quarter of the previous year and they recorded net earnings of $87.33 million for the quarter.
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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 - Julien R. Mininberg, Chief Executive Officer"
About Helen of Troy
Helen of Troy Limited (NASDAQ: HELE) 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 OXO, Hydro Flask, Vicks, Braun, Honeywell, PUR, and Hot Tools. All trademarks herein belong to Helen of Troy Limited (or its affiliates) and/or are used under license from their respective licensors.
Overview of Helen of Troy's 2nd quarter 2021 earnings report
- Total Revenues: $530.852 million (up from $413.995 million for the same quarter of the previous year)
- Total Revenues increased by 28.2% over the last 12 months
- Cost of sales: $300.516 million (up from $235.844 million for the same quarter of the previous year)
- Cost of sales increased by 27.4% over the last 12 months
- Net income: $87.333 million (up from $46.095 million for the same quarter of the previous year)
- Diluted earnings per share: $3.43 (up from $1.83 for the same quarter of the previous year)
- PE ratio: 19.1
- Diluted weighted-average shares outstanding: 25.458 million (up from 25.245 million for the same quarter of the previous year)
- Cash and cash equivalents: $148.399 million
- Cash and cash equivalents per share: $5.82
- Cash and cash equivalents makes up 2.9% of Helen of Troy's market capital
- Cash and cash equivalents makes up 6.8% of Helen of Troy's total assets
- Accounts receivable: $402.027 million
- Accounts receivable makes up 18.4% of Helen of Troy's total assets
- Cash generated from operations: $186.28 million
- Cash generated from operations per share: $7.31
- Stockholders equity of Helen of Troy: $1.308 billion
- Stockholders equity per share: $51.37
- So Helen of Troy is trading at 3.86 times its stockholders equity which is within the expected range of between 2 and 4 times that most firms tend to trade at.
Helen of Troy's management commentary on their 2nd quarter 2021 earnings report
EL PASO, Texas--(BUSINESS WIRE)-- Helen of Troy Limited (NASDAQ: HELE), 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 August 31, 2020.
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.”
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.”
Balance Sheet and Cash Flow Highlights - Second Quarter Fiscal 2021 Compared to Second Quarter Fiscal 2020
Executive Leadership Updates
The Company announced today that Chief Executive Officer Julien R. Mininberg intends to extend his employment with the Company through February 29, 2024. The Company and Mr. Mininberg are working to finalize an amended employment agreement.
The Company also announced that Chief Financial Officer Brian L. Grass intends to retire to pursue entrepreneurial interests and will step down from his position effective November 1, 2021, after more than 15 years at the Company and more than seven years in the CFO role. Mr. Grass stated: “I have put aside my entrepreneurial interests for almost my entire career and I have reached a point where I can explore these interests in a financially responsible way, while still being young enough to do it. I am proud to say that the Company has never been stronger financially, operationally, and strategically, and I believe the best is yet to come. I’m also proud that we have developed strong internal CFO succession talent, whom we will continue to groom over the next year. The Company also intends to conduct an external search to ensure the best possible succession for Helen of Troy. I want to thank Julien, the Board of Directors, our Global Leadership Team, and the Company's finance organization for allowing me to be a part of this amazing journey. It is a gift to be entrusted with the responsibility of leading a company like Helen of Troy, and I am truly grateful. I look forward to working with Julien over the next year to ensure the smoothest possible transition for the Company.”
Mr. Mininberg stated: “I would like to thank Helen of Troy’s Board of Directors for their continued faith in me. I believe there is considerable opportunity ahead for continued growth of our revenues, profitability, brand portfolio, global footprint, and capabilities. I am honored not only to provide continuity of leadership through the remaining three and half years of Phase II of our Transformation Plan, but also to lead the Company through all ten years of Transformation, beginning in 2014 with the start of Phase I. I look forward to stewarding the Company through the end of fiscal year 2024 and through succession planning for the next generation of leaders.”
“Brian is a valued partner to me and our Global Leadership Team. I greatly appreciate his expertise, integrity, high standards, and countless contributions advancing our evolution into a company that is built to last. Over the next year, he will continue to remain fully in his current role, providing highly effective executive management and financial governance, and will assist with a seamless transition when the time comes. Our search will be comprehensive, including outstanding internal talent and external candidates, as we seek a successor CFO that can provide the outstanding level of financial leadership we are accustomed to and continue to help us deliver on our Transformation.”
Fiscal 2021 Business Update
Due to the evolving COVID-19 pandemic and related consumer and business uncertainty, the Company is not providing an outlook for fiscal 2021 at this time. In addition to the lack of visibility into consumer demand and the uncertain impact of COVID-19 on the retail environment, trends are emerging that may impact the Company’s ability to fulfill some orders on a timely basis or make marketing investments with an acceptable return, all of which have a significant impact on the Company’s ability to forecast within a reasonable range.
As previously disclosed, during the first quarter of fiscal 2021, as part of a comprehensive approach to preserve its cash flow and adjust its cost structure to align to lower anticipated revenue related to the business disruption and uncertainty of COVID-19, the Company implemented a number of temporary precautionary measures. Based on stronger than expected performance, the Company reversed a number of these measures toward the end of the second quarter of fiscal 2021, including a restoration of all wages, salaries, and director compensation to pre-COVID-19 levels. In addition, towards the end of the second quarter the Company also selectively increased levels of investments in certain marketing activities, new product development and launches, and capital expenditures. During the remainder of the fiscal year, the Company is planning to continue to increase its marketing and other growth investments.
The Company continues to see very strong demand trends in many of its product categories. In the second quarter of fiscal 2021, demand continued to outpace even recently increased supply capacity with respect to thermometry, air filtration, water filtration and various products within Housewares, which in some cases is resulting in out of stocks. Surges in demand and shifts in shopping patterns related to COVID-19 have strained the U.S. freight network, which is resulting in carrier delays. In addition to Housewares sales growth of 14.1% and 22.4% in fiscal years 2019 and 2020, respectively, demand has further surged for the OXO brand, which in combination with carrier delays, has caused order flow to outpace shipping capacity in the Company’s distribution center. In some cases, this is resulting in out of stocks at retail for some OXO items. While the Company has moved quickly to bring additional distribution and storage facilities online in support of surging order volume and higher targeted inventory holdings heading into our peak selling season, it believes there could continue to be some level of out of stocks in certain parts of its business.
Not only do these trends impact the Company’s ability to accurately forecast revenue, they can also limit the Company’s ability to make marketing expenditures with an adequate return on investment. In certain categories, where macro-trends like COVID-19 are driving demand significantly higher than historical levels or in situations where supply or distribution is capacity constrained, the Company believes that driving additional demand through incremental marketing activities could compound potential shipment delays or out of stocks. In these situations, currently planned marketing investments designed to drive incremental short-term demand would not be made.
The Company believes these factors could contribute to a wide variation of outcomes with respect to the Company’s adjusted diluted EPS for the remainder of the fiscal year. The Company’s base plan is to make the majority of the incremental marketing investments that were planned at the beginning of the year and that the Company believes are best for the long-term health of its brands. If the Company is able to execute against its base plan, the Company would expect adjusted operating margin for the full fiscal year to expand by approximately 0.2 to 0.4 percentage points compared to fiscal 2020. If current demand trends continue and the Company is not able to execute against its base plan, the Company estimates adjusted operating margin could expand by as much as 0.8 to 1.6 percentage points for the full fiscal year compared to fiscal 2020. As a result, the Company estimates there could be as much as $0.50 to $1.00 of adjusted diluted EPS variability just from marketing investments that are planned for the second half of the fiscal year, but may not be made due to an unacceptable return on investment, capacity constraints or a lack of visibility. This range does not include the additional potential revenue variability from COVID-19.
- Cash and cash equivalents totaled $148.4 million, compared to $17.0 million.
- Accounts receivable turnover was 68.7 days, compared to 68.4 days.
- Inventory was $350.2 million, compared to $370.9 million. Trailing twelve-month inventory turnover was 3.3 times compared to 2.9 times.
- Total short- and long-term debt was $300.1 million, compared to $301.2 million.
- Net cash provided by operating activities for the first six months of the fiscal year was $186.3 million, compared to $38.2 million.
Executive Leadership Updates
The Company announced today that Chief Executive Officer Julien R. Mininberg intends to extend his employment with the Company through February 29, 2024. The Company and Mr. Mininberg are working to finalize an amended employment agreement.
The Company also announced that Chief Financial Officer Brian L. Grass intends to retire to pursue entrepreneurial interests and will step down from his position effective November 1, 2021, after more than 15 years at the Company and more than seven years in the CFO role. Mr. Grass stated: “I have put aside my entrepreneurial interests for almost my entire career and I have reached a point where I can explore these interests in a financially responsible way, while still being young enough to do it. I am proud to say that the Company has never been stronger financially, operationally, and strategically, and I believe the best is yet to come. I’m also proud that we have developed strong internal CFO succession talent, whom we will continue to groom over the next year. The Company also intends to conduct an external search to ensure the best possible succession for Helen of Troy. I want to thank Julien, the Board of Directors, our Global Leadership Team, and the Company's finance organization for allowing me to be a part of this amazing journey. It is a gift to be entrusted with the responsibility of leading a company like Helen of Troy, and I am truly grateful. I look forward to working with Julien over the next year to ensure the smoothest possible transition for the Company.”
Mr. Mininberg stated: “I would like to thank Helen of Troy’s Board of Directors for their continued faith in me. I believe there is considerable opportunity ahead for continued growth of our revenues, profitability, brand portfolio, global footprint, and capabilities. I am honored not only to provide continuity of leadership through the remaining three and half years of Phase II of our Transformation Plan, but also to lead the Company through all ten years of Transformation, beginning in 2014 with the start of Phase I. I look forward to stewarding the Company through the end of fiscal year 2024 and through succession planning for the next generation of leaders.”
“Brian is a valued partner to me and our Global Leadership Team. I greatly appreciate his expertise, integrity, high standards, and countless contributions advancing our evolution into a company that is built to last. Over the next year, he will continue to remain fully in his current role, providing highly effective executive management and financial governance, and will assist with a seamless transition when the time comes. Our search will be comprehensive, including outstanding internal talent and external candidates, as we seek a successor CFO that can provide the outstanding level of financial leadership we are accustomed to and continue to help us deliver on our Transformation.”
Fiscal 2021 Business Update
Due to the evolving COVID-19 pandemic and related consumer and business uncertainty, the Company is not providing an outlook for fiscal 2021 at this time. In addition to the lack of visibility into consumer demand and the uncertain impact of COVID-19 on the retail environment, trends are emerging that may impact the Company’s ability to fulfill some orders on a timely basis or make marketing investments with an acceptable return, all of which have a significant impact on the Company’s ability to forecast within a reasonable range.
As previously disclosed, during the first quarter of fiscal 2021, as part of a comprehensive approach to preserve its cash flow and adjust its cost structure to align to lower anticipated revenue related to the business disruption and uncertainty of COVID-19, the Company implemented a number of temporary precautionary measures. Based on stronger than expected performance, the Company reversed a number of these measures toward the end of the second quarter of fiscal 2021, including a restoration of all wages, salaries, and director compensation to pre-COVID-19 levels. In addition, towards the end of the second quarter the Company also selectively increased levels of investments in certain marketing activities, new product development and launches, and capital expenditures. During the remainder of the fiscal year, the Company is planning to continue to increase its marketing and other growth investments.
The Company continues to see very strong demand trends in many of its product categories. In the second quarter of fiscal 2021, demand continued to outpace even recently increased supply capacity with respect to thermometry, air filtration, water filtration and various products within Housewares, which in some cases is resulting in out of stocks. Surges in demand and shifts in shopping patterns related to COVID-19 have strained the U.S. freight network, which is resulting in carrier delays. In addition to Housewares sales growth of 14.1% and 22.4% in fiscal years 2019 and 2020, respectively, demand has further surged for the OXO brand, which in combination with carrier delays, has caused order flow to outpace shipping capacity in the Company’s distribution center. In some cases, this is resulting in out of stocks at retail for some OXO items. While the Company has moved quickly to bring additional distribution and storage facilities online in support of surging order volume and higher targeted inventory holdings heading into our peak selling season, it believes there could continue to be some level of out of stocks in certain parts of its business.
Not only do these trends impact the Company’s ability to accurately forecast revenue, they can also limit the Company’s ability to make marketing expenditures with an adequate return on investment. In certain categories, where macro-trends like COVID-19 are driving demand significantly higher than historical levels or in situations where supply or distribution is capacity constrained, the Company believes that driving additional demand through incremental marketing activities could compound potential shipment delays or out of stocks. In these situations, currently planned marketing investments designed to drive incremental short-term demand would not be made.
The Company believes these factors could contribute to a wide variation of outcomes with respect to the Company’s adjusted diluted EPS for the remainder of the fiscal year. The Company’s base plan is to make the majority of the incremental marketing investments that were planned at the beginning of the year and that the Company believes are best for the long-term health of its brands. If the Company is able to execute against its base plan, the Company would expect adjusted operating margin for the full fiscal year to expand by approximately 0.2 to 0.4 percentage points compared to fiscal 2020. If current demand trends continue and the Company is not able to execute against its base plan, the Company estimates adjusted operating margin could expand by as much as 0.8 to 1.6 percentage points for the full fiscal year compared to fiscal 2020. As a result, the Company estimates there could be as much as $0.50 to $1.00 of adjusted diluted EPS variability just from marketing investments that are planned for the second half of the fiscal year, but may not be made due to an unacceptable return on investment, capacity constraints or a lack of visibility. This range does not include the additional potential revenue variability from COVID-19.
Helen of Troy (NASDAQ: HELE) stock price history
The image below, obtained from Google, shows the stock price history of Helen of Troy over the last 5 years. And it's been a very good time for Helen of Troy's stockholders.5 years ago the stock was trading at around $99.90 a stock and its currently trading at $198.11 a stock. That's a very strong return of 98% provided to Helen of Troy stockholders over the last 5 years.
The stock of Helen of Troy is trading at a lot closer to its 52 week high of $ 213han it is to its 52 week low of $104.02 which to us is a clear indication that the short term sentiment and momentum of Helen of Troy's stock is very positive at this point in time.
The stock of Helen of Troy is trading at a lot closer to its 52 week high of $ 213han it is to its 52 week low of $104.02 which to us is a clear indication that the short term sentiment and momentum of Helen of Troy's stock is very positive at this point in time.
Helen of Troy (HELE) stock vs Lifetime Brands (LCUT) stock over the last 5 years
The image below shows the stock price performance of Helen of Troy (HELE) and Lifetime Brands (LCUT) over the last 5 years. While both owns various consumer brands, their two firms stock price trends and performance over the last 5 years are very different. The summary below shows the stock price performance of the two firms over the last 5 years.
- Helen of Troy (HELE): 98%
- Lifetime Brands (LCUT): -28.9%
Recent coverage of Helen of Troy
The extract below discusses the latest regarding Helen of Troy as obtained from Marketwatch.com
Helen of Troy Ltd. on Thursday posted year-over-year profit and revenue growth in the latest quarter on strong online sales of its products across business segments. The company, which makes household products and personal-care products, recorded a second-quarter net profit of $87.3 million, or $3.43 a share, compared with $46.1 million, or $1.83 a share, a year earlier.
On an adjusted basis, the company's profit was $3.77 a share. Analysts polled by FactSet had forecast an adjusted profit of $2.38 a share. Revenue was $530.9 million, up from $414 million in last year's second quarter. Analysts had forecast revenue of $440 million. Amid the coronavirus pandemic and wildfires in California, customers were shopping online more for products to use at home, Helen of Troy said. Sales for the company's housewares segment grew 20.3% year over year amid higher online sales for Helen of Troy's OXO and Hydro Flask brands. Health and home sales climbed 33.2%, and sales for the company's beauty segment rose by 34.6%, including contribution of its recently acquired Drybar Products, a line of hair-care products, the company said.
Online channel net sales grew by approximately 32%, as people shopped at home more during the pandemic. E-commerce now represents 24% of the company's total sales, Helen of Troy said.
Read the full article here
Helen of Troy Ltd. on Thursday posted year-over-year profit and revenue growth in the latest quarter on strong online sales of its products across business segments. The company, which makes household products and personal-care products, recorded a second-quarter net profit of $87.3 million, or $3.43 a share, compared with $46.1 million, or $1.83 a share, a year earlier.
On an adjusted basis, the company's profit was $3.77 a share. Analysts polled by FactSet had forecast an adjusted profit of $2.38 a share. Revenue was $530.9 million, up from $414 million in last year's second quarter. Analysts had forecast revenue of $440 million. Amid the coronavirus pandemic and wildfires in California, customers were shopping online more for products to use at home, Helen of Troy said. Sales for the company's housewares segment grew 20.3% year over year amid higher online sales for Helen of Troy's OXO and Hydro Flask brands. Health and home sales climbed 33.2%, and sales for the company's beauty segment rose by 34.6%, including contribution of its recently acquired Drybar Products, a line of hair-care products, the company said.
Online channel net sales grew by approximately 32%, as people shopped at home more during the pandemic. E-commerce now represents 24% of the company's total sales, Helen of Troy said.
Read the full article here
Helen of Troy (NASDAQ: HELE) latest stock valuation
So what is Helen of Troy's stock worth based on the release of their latest earnings report? Based on the group's latest earnings and their outlook provided our valuation model provides a target (full value) price at $179.80 a Helen of Troy stock. We therefore believe that the stock of Helen of Troy is overvalued.
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $179.80. Thus we see a good entry point into Helen of Troy's stock at $161.80 or below. We believe that Helen of Troy's stock will pull back in coming weeks and months to levels closer to our target price (full value price).
Since the stock of Helen of Troy (HELE) is trading at well above our suggested entry point we rate the stock of HELE as a sell
We usually suggest long term fundamental or value investors look to enter into a stock at least 10% below our target (full value) price which in this case is $179.80. Thus we see a good entry point into Helen of Troy's stock at $161.80 or below. We believe that Helen of Troy's stock will pull back in coming weeks and months to levels closer to our target price (full value price).
Since the stock of Helen of Troy (HELE) is trading at well above our suggested entry point we rate the stock of HELE as a sell
Next earnings release of Helen of Troy
It is expected that Helen of Troy will release their 3rd quarter 2021 earnings report in early January 2021