Helen of Troy Limited

Please stand by. Good day and welcome to the Helen of Troy Limited first quarter 2020 earnings call. Today's conference is being recorded. At this time, I would like to turn the conference over to Jack Jansen, Senior Vice President of Corporate Business Development. You may begin.

Thank you, Operator. Good afternoon, everyone, and welcome to Helen of Troy's first quarter fiscal 2020 earnings conference call. The agenda for the call this afternoon is as follows. I'll begin with a brief discussion of forward-looking statements. Mr. Julian Mindenberg, the company's CEO, will comment on the financial performance of the quarter and specific progress on our strategic initiatives. Then, Mr. Brian Grass, the company's CFO, will review the financials in more detail and comment on the company's outlook for fiscal 2020. Following this, Mr. Mindenberg and Mr. Grass will take your questions you have for us today. This conference call may contain certain forward-looking statements that are based on management's current expectations. with respect to future events or financial performance. Generally, the words anticipates, believes, expects, and other words similar are words identifying forward looking statements. Forward looking statements are subject to a number of risks and uncertainties that could cause anticipated results to differ materially from the actual results. This conference call may also include information that may be considered non-GAAP financial information. These non-GAAP measures are not an alternative to GAAP financial information and may be calculated differently than the non-GAAP financial information disclosed by other companies. The company cautions listeners not to place undue reliance on forward-looking statements or non-GAAP information. Before I turn the call over to Mr. Minnenberg, I'd like to inform all interested parties that a copy of today's earnings release has been posted to the investor relations section of the company's website at www.minnenberg.com. Helen of Troy.com. The earnings release contains tables that reconcile non-GAAP financial measures to their corresponding GAAP-based measures. The release can be obtained by selecting the investor relations tab on the company's homepage and then the news tab. I will now turn the conference call over to Mr. Minnenberg.

Thank you, Jack. Good afternoon, everyone, and thank you for joining us. This afternoon, we reported a great start to our fiscal year, also a great start to phase two of our transformation plan, which we detailed during our May 21st Investor Day in New York. Consolidated core business sales grew 6.8% and adjusted diluted EPS grew 10.2% in the quarter. Both ahead of our expectations given the especially high year ago base. Sales growth was driven by our leadership brands which grew 7.4%. Our continued focus and investments in innovation and marketing paid off handsomely. We gained further ground online with sales growing 28%, now representing 23% of consolidated sales for the quarter. These operating results give us the fuel to further increase our spending behind attractive investment opportunities for the balance of the year and also raise our revenue and EPS outlook for fiscal 2020. Before continuing my discussion on the quarter's results, I'd like to express my sincere appreciation for those of you who attended or listened to our investor day. In addition to presenting our Phase 2 plans, we introduced you to some of the outstanding leaders in our company, shared our long-term financial goals for Phase 2, and gave you a flavor of the culture and level of engagement that our people bring to work every day. We believe their passionate commitment powers Helen of Troy and is a key driver of success as our Phase 2 plans come to life. As outlined during Investor Day, Phase 2 builds on the accomplishments of Phase 1 by focusing on eight key strategic priorities. These are investing in leadership brands, doubling down on international, selective and strategic M&A, consumer-centric, unifying and elevating the best people, accelerating shared service excellence, maximizing operating efficiency, and optimizing capital deployment. Since deploying these strategies internally nine months ago, We have been implementing them to bring next level capabilities to our organization and pursue new growth opportunities for our leadership brands. OXO, Hydro Flask, Vicks, Braun, Honeywell, Pure, and Hot Tools comprise approximately 80% of our net sales and an even higher proportion of our operating profit. They sweeten our mix as we continue to grow them. The innovation showcase section of Investor Day revealed important new product launches and highlighted the skill and creativity of our consumer-centric engineers, leaders and our sales and marketing organizations. They work tirelessly to match consumer insights and trends to new technologies and differentiated, timeless designs. For us, delighting end consumers with branded solutions they love and trust is a healthy obsession. Again, thank you to everyone who joined us during Investor Day. Now I'd like to turn to a review of our business segments in this quarter. Sales growth was led by our housewares segment, which increased core business net sales by 23.8% with growth across both brands. Outstanding. OXO saw strong growth at key brick and mortar retailers as we gained distribution, benefited from solid POS, and improved store traffic at key retailers. New product introductions contributed to OXO's growth as both retailers and consumers responded well to new launches. Further investment in OXO's equity in-store, in e-commerce, and via digital marketing were also key drivers. The food storage and kitchen organization categories were particularly strong and on-trend, with the rising popularity of organizational gurus that focus on decluttering and household organization. For Hydroflask, another outstanding quarter. The brand's strong equity and popularity continued to grow with outdoor enthusiasts and retailers alike. It continues to expand its number one market share position and reinforce its role as a key contributor to category growth for high-performance insulated hydration vessels. The brand made terrific strides with retailers and consumers on the east coast of the United States, especially in the northeast, where we further expanded hydroplastic offerings in brick and mortar, broadened placement on the shelf, and expanded the selection of on-trend and trend-setting items. We are seeing strong point of sale results in inventory replenishment orders in line with accelerating sell-through for those customers where we have the visibility. In addition to Hydroflask's growing brand equity, the introduction of a new spring collection of refreshingly bold colors across the hydration, coffee, beer, and food lines is resonating well with consumers. Hydroflask also advanced its Beyond the Bottle Strategy, with the announcement of a number of new products in its growing line of soft goods, including two new high-performance hydration packs. The first is the new 14-liter Downshift hydration pack, designed to provide a lower center of gravity and increased stability. The second is the new 16-liter Women's hydration pack, tailored through the back panel, shoulder straps, and hip belt to fit more comfortably on a woman's body. These new consumer-centric insulated hydration backpacks are especially suited to mountain bikers and hikers. Their innovative cold flow system allows for more than four hours of hands-free cold hydration. More new products are on the way, both in bottles and beyond. Outside the U.S., Hydro Flask continues to grow and is targeted key markets as we double down on international. We believe Hydro Flask offers much more promise and can be a leading environmental, and Sustainability Forward Authentic Global Brand. Turning to the health and home segment, core business net sales declined 4% in the quarter in the face of a difficult comparison to the prior year. However, we made sequential improvements in Asia Pacific as retailers sold down previously elevated inventory levels, earned incremental US distribution for our VIX thermometers and our VAPO lines and introduced new products. Recent new launches such as the Honeywell Dreamweaver Sleep Fan have been well received. A great example of our just one more strategy, this product furthers the reach of Honeywell fans into households. The Dreamweaver extends the brand into the sleep category with new benefits that can keep a formerly seasonal product front and center all year long. It uses a soothing sound frequency tone called Pink Noise to provide sound blocking benefits that can help promote deeper, more restorative sleep. To help it earn and keep a spot on nightstands, it also includes a USB charger for bedside essentials like phones. Similarly, in beauty, consumer-centric innovation continues to be a key success driver. The appliance momentum of the past two years accelerated in the quarter, driving 3.8% growth in core business sales for beauty. Our innovations, Combined with digital marketing and increasingly viral support for consumers are key drivers of this success. Online and international were also standouts in the quarter for appliances. We have rapidly earned a large base of four and five star ratings on key websites and are earning strong support from bloggers and media as word spreads. Stepping away from the business segment, I would like to now spotlight some of the other phase two strategies where we made good progress in the quarter. namely accelerating shared service excellence, maximizing operating efficiency, and unifying and elevating the best people. For shared services, a key focus area in phase two is building further excellence in our processes. We have begun what we call the Helen of Troy way, which includes simplifying, standardizing, and systematizing over 150 unique processes across our supply chain with the intent to create new efficiencies Lower Inventory, and Reduce Out of Stocks at the Point of Purchase. As an example, at the very end of May, we rolled out an upgrade of our Oracle Demand Planning tool. This is key when managing a complex global portfolio across multiple product categories, regions, and customer requirements. In addition, during the quarter, we also successfully transitioned our Hydroflask direct-to-consumer operations from a third-party partner to our own distribution center. and are now in the midst of transitioning our customization operations and retail distribution in-house. We expect these actions will help improve cost, quality and speed. These changes and many more like them that are planned for phase two would not be possible without the culture of collaboration that is now second nature across all Helen of Troy business units, shared services and regional organizations. During phase one, we substantially upgraded our talent pool. In Phase 2, we are emphasizing training and raising the bar on performance expectations. During the quarter, we rolled out our new Helen of Troy Academy, an in-house suite of training programs that helps each associate sharpen their skills and reach their full potential. It has been very well received, and the new skills will take our people even farther. Before I turn the call over to Brian, I want to thank you again for your trust and support as we focus on Phase 2. We have created a flywheel with considerable potential for further value creation. Its power starts with our people who are focused on organic revenue growth, margin expansion from innovation, and investment in our leadership brands. It gains efficiency from improvements to shared services and working capital. Further momentum comes from our debt and tax structure and accretive low-risk deployment of capital. We believe these powerful elements drive the flywheel. They also underscore my belief that the brightest days for Helen of Troy are ahead of us. With that, I will now turn the call over to Brian.