Helen of Troy reports fiscal Q3 net earnings of US$37.5M, compared to year-ago earnings of US$37.7M; net sales revenue rises 1.6% to record US$380.7M

EL PASO, Texas , January 9, 2014 (press release) – Third Quarter Diluted EPS of $1.16

Net Sales Growth of 1.6% Compared to Third Quarter of Prior Fiscal Year

Helen of Troy Limited (NASDAQ, NM:HELE), designer, developer and worldwide marketer of brand-name houseware, healthcare/home environment and personal care consumer products, today reported results for the three and nine month periods ended November 30, 2013.

Gerald J. Rubin, Chairman of the Board, Chief Executive Officer and President, commenting on the Company's fiscal year 2014 third quarter results, stated, “We continued our positive momentum during the quarter, increasing consolidated sales revenue, operating income and adjusted EBITDA. Sales growth was led by our Housewares segment, through the extension of OXO categories as well as expanded shelf space and assortments at several key retailers. Better product mix and new product introductions supported by effective marketing strategies drove sales growth in our Healthcare/Home Environment segment. While our Personal Care segment continues to face a challenging retail environment, which pressured sales, we increased profitability in this segment. I am pleased with how our team continues to diligently manage expenses in order to mitigate product cost increases, which resulted in a decline in our selling, general and administrative expense (“SG&A”) as a percentage of sales revenue, and increased operating profitability in the quarter on a year-over-year basis.

During the quarter we began shipping out of our new 1.3 million square foot distribution facility in Olive Branch, Mississippi and expect to complete the transition of our domestic Personal Care appliance distribution operations to the new facility, on schedule, in the first quarter of fiscal year 2015. Together with our 1.2 million square foot distribution facility in Southaven, Mississippi, this new facility gives us 2.5 million square feet in the region and the ability to continue to grow our business,” Mr. Rubin concluded.

Third Quarter of Fiscal Year 2014 Consolidated Operating Results

Net sales revenue increased 1.6% to a record $380.7 million compared to $374.6 million in the third quarter of fiscal year 2013.

Gross profit margin was 38.8% compared to 39.6% for the same period last year, reflecting increased promotional program costs, the negative effect of foreign currency exchange rates and product cost increases across all segments.

SG&A was 25.8% as a percent of net sales compared to 27.1% for the same period last year, a decrease of 130 basis points. The decrease primarily reflects lower media advertising costs and the favorable comparative impact arising from a product packaging litigation expense recorded during the same quarter last year. These expense reductions were partially offset by higher incentive compensation costs.

Operating income increased 5.0% to a record $49.4 million compared to operating income of $47.1 million in the same period last year.

Net income was $37.5 million, or $1.16 per fully diluted share on 32.5 million weighted average shares outstanding, which compares to net income in the third quarter of fiscal year 2013 of $37.7 million, or $1.18 per fully diluted share on 32.0 million weighted average shares outstanding.

Adjusted EBITDA (EBITDA without non-cash share based compensation) increased 6% to $60.5 million compared to $57.1 million in the same period last year.

First Nine Months of Fiscal Year 2014 Consolidated Operating Results

Net sales revenue increased 4.4% to a record $1,004.6 million compared to $962.2 million in the first nine months of fiscal year 2013.

Gross profit margin was 38.9% compared to 40.2% for the same period last year, reflecting increased promotional program costs, the effect of foreign currency exchange rate fluctuations and product cost increases across all segments.

SG&A was 27.7% as a percent of net sales compared to 28.8% for the same period last year, a decrease of 110 basis points. The decrease primarily reflects lower outbound freight and distribution costs, reduced media advertising costs and the favorable comparative impact arising from a product packaging litigation expense recorded during the third fiscal quarter last
year. These expense reductions were partially offset by higher incentive compensation costs.

Operating income was $100.4 million, which includes the impact of $12.0 million in non-cash asset impairment charges related to certain trademarks in the Company’s Personal Care segment recorded in the first quarter of fiscal 2014, compared to operating income of $109.0 million in the same period last year.

Net income was $75.2 million, or $2.33 per fully diluted share on 32.3 million weighted average shares outstanding, which compares to net income in the first nine months of fiscal year 2013 of $84.2 million, or $2.64 per fully diluted share on 31.9 million weighted average shares outstanding.

Adjusted operating income (operating income without non-cash asset impairment charges) was $112.4 million compared to $109.0 million for the same period last year, an increase of 3.1%.

Adjusted income (net income without non-cash asset impairment charges) was $87.3 million, or $2.70 per fully diluted share, compared to $84.2 million, or $2.64 per fully diluted share, in the first nine months of fiscal year 2013. This represents an increase in adjusted income of 3.7% and in adjusted diluted earnings per share of 2.3%.

Adjusted EBITDA (EBITDA without non-cash asset impairment charges and non-cash share based compensation) increased 4.9% to $146.9 million compared to $140.0 million in the same period last year.

Balance Sheet Highlights

Cash and cash equivalents totaled $28.8 million at November 30, 2013, compared to $16.1 million at November 30, 2012.

Total short and long-term debt declined by $103.0 million to $215.4 million at November 30, 2013, compared to $318.4 million at November 30, 2012.

Accounts receivables turnover was 65.5 days at November 30, 2013, compared to 62.7 days at November 30, 2012.

Inventory was $289.9 million at November 30, 2013, compared to $306.3 million at November 30, 2012.

Fiscal Year 2014 Annual Outlook

For fiscal year 2014, the Company continues to expect net sales revenue in the range of $1.29 billion to $1.32 billion, and diluted EPS in the range of $3.13 to $3.23, which includes the non-cash asset impairment charges of $0.37 per share recorded in the first quarter of fiscal year 2014. The Company expects adjusted diluted EPS to be in the range of $3.50 to $3.60, which is consistent with the Company’s previous guidance. The earnings guidance reflects the negative impact of the difficult retail environment, a normal cold/cough/flu season, product cost increases across all segments, an increase in non-cash compensation expense for the Company’s CEO, and an incentive compensation program for the Healthcare/Home Environment segment. The Company expects capital expenditures for fiscal year 2014 to be in the range of $40 million to $45 million, with approximately $33 million related to the completion of the Company’s new 1.3 million square foot distribution center in Olive Branch, Mississippi.

Conference Call and Webcast

The Company will conduct a teleconference in conjunction with today's earnings release. The teleconference begins at 4:45 pm Eastern Time today, Thursday, January 9, 2014. Institutional investors and analysts interested in participating in the call are invited to dial (888) 417-8465. The conference call will also be available to interested parties through a live webcast at www.hotus.com. Please visit the website and select the “Investor Relations” link at least 15 minutes prior to the start of the call to register and download any necessary software.

A telephone replay of the call will be available until 11:59 pm Eastern Time on January 16, 2014, by dialing (877) 570-5176 (domestic) or (858) 384-5517 (international) and entering the conference replay number: 8376226. Please note participants must enter the conference identification number in order to access the replay.

About Helen of Troy Limited:

About Helen of Troy Limited: Helen of Troy Limited 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: Housewares: OXO®, Good Grips®, Soft Works®, OXO tot® and OXO Steel®; Healthcare/Home Environment: Vicks®, Braun®, Honeywell®, PUR®, Febreze®, Stinger®, Duracraft® and SoftHeat®; and Personal Care: Revlon®, Vidal Sassoon®, Dr. Scholl's®, Pro Beauty Tools®, Sure®, Pert®, Infusium23®, Brut®, Ammens®, Hot Tools®, Bed Head®, Karina®, Ogilvie® and Gold 'N Hot®. The Honeywell® trademark is used under license from Honeywell International Inc. The Vicks®, Braun®, Febreze® and Vidal Sassoon® trademarks are used under license from The Procter & Gamble Company. The Revlon® trademark is used under license from Revlon Consumer Products Corporation. The Bed Head® trademark is used under license from Unilever PLC. The Dr. Scholl's® trademark is used under license from MSD Consumer Care, Inc.

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