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Helen of Troy Q2 2023 net sales revenue increased 9.7%

Christian Fernsby |
Helen of Troy reported results for Q2 2023 ended August 31, 2022.

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Consolidated net sales revenue increased $46.2 million, or 9.7%, to $521.4 million compared to $475.2 million.

The increase was primarily due to the contribution from the acquisitions of Osprey of $47.4 million and Curlsmith of $10.2 million, or 12.1% to consolidated net sales revenue growth.

This growth was partially offset by a decrease from Organic business of $7.2 million, or 1.5%.

The Organic business decrease primarily reflects lower sales in the Beauty segment hair appliances category and home-related categories in the Home & Outdoor segment due to lower consumer demand, shifts in consumer spending patterns and reduced orders from retail customers due to higher trade inventory levels, and a net sales revenue decline of $5.7 million in Non-Core business due to the sale of the Personal Care business.

These factors were partially offset by an increase in sales in the Health & Wellness segment as a result of the EPA packaging compliance matter and related stop shipment actions in the comparative prior year period, growth in international sales, higher prestige market personal care category sales in the Beauty segment, and the impact of customer price increases related to rising freight and product costs.

Consolidated gross profit margin decreased 1.8 percentage points to 42.5%, compared to 44.3%.

The decrease in consolidated gross profit margin was primarily due to the unfavorable impact of less Beauty segment sales within consolidated net sales revenue, a less favorable product mix within the Home & Outdoor segment due to the acquisition of Osprey, an increase in EPA compliance costs of $6.7 million, higher inventory obsolescence expense, and the net dilutive impact of inflationary costs and related customer price increases.

These factors were partially offset by a more favorable product mix within the Beauty segment.

Consolidated selling, general and administrative expense (“SG&A”) ratio increased 2.5 percentage points to 32.6%, compared to 30.1%.

These factors were partially offset by the favorable leverage impact of the increase in net sales, the favorable leverage impact of customer price increases related to inflationary costs, reduced annual incentive compensation expense, and a decrease in EPA compliance costs of $1.4 million.

Consolidated operating income was $46.9 million, or 9.0% of net sales revenue, compared to $67.3 million, or 14.2% of net sales revenue.

These factors were partially offset by favorable operating leverage, reduced annual incentive compensation expense, a decrease in share-based compensation expense, and a more favorable product mix within the Beauty segment.

Interest expense was $9.2 million, compared to $3.3 million.

The increase in interest expense was primarily due to higher average levels of debt outstanding, including borrowings to fund the acquisitions of Osprey and Curlsmith as well as construction of a new distribution center, and higher average interest rates.

Income tax expense as a percentage of income before income tax was 19.1% compared to 19.8%, primarily due to the mix of taxable income in various tax jurisdictions.

Net income was $30.7 million, compared to $51.3 million.

Diluted EPS was $1.28, compared to $2.11.

Diluted EPS decreased primarily due to lower operating income in the Beauty segment, an operating loss in the Health & Wellness segment, and higher interest expense.

These factors were partially offset by higher operating income in the Home & Outdoor segment, a decrease in the effective tax rate and lower weighted average diluted shares outstanding.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) decreased 9.6% to $78.8 million compared to $87.2 million.


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