Helen of Troy Limited

Greetings. Welcome to Helen of Troy second quarter 2020 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to Jack Jansen, Senior Vice President of Corporate Business Development. Thank you and may begin.

Thank you, operator. Good morning, everyone, and welcome to Helena Troy's second quarter fiscal 2020 earnings conference call. The agenda for the call this morning is as follows. I'll begin with a brief discussion of forward-looking statements. Mr. Julian Minnenberg, 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. Minnenberg 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 expectation 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 calls on 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.HelenofTroy.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. Mittenberg.

Thank you, Jack, and good morning, everyone. Thank you for joining us today. Before discussing our business, I'd like to extend my gratitude for the outreach and concern that many of you offered after the mass shooting in El Paso in August. While the city is still mourning, we are very proud of its resilience and how the citizens and leaders from El Paso and across the nation came together to support victims and their families in the face of senseless and hateful violence. I am also proud that Helena Troy is a company and so many of our associates around the world stepped up immediately, emotionally, financially and with their time to help the victims and their families and to support the community we are proud to call home for over 50 years. Now turning to a discussion of our business performance in the second quarter of fiscal 2020, this morning we reported another healthy quarter which featured a 5.7% increase in our core business sales against a very strong year ago comparison and an increase in adjusted diluted EPS of 13.1%. Our quarterly results featured benefits from a diversified portfolio of brands, margin expansion beyond improving our mix, disciplined incremental investment spending and operating efficiency within our business units and also in our shared service platforms. The results underscore the flywheel effect from continuing to execute the strategies underlying phase two of our transformation plan. Our sales growth was led by an online increase of approximately 25% product innovation and growth in international sales. Online sales represented approximately 24% of our total sales in the quarter. The overall strong result for the company featured 3.8% growth in leadership brands driven by substantial growth in housewares which more than offset the difficult comparison for the health and home leadership brands that grew 22.3% in the same period last year. Beyond our leadership brands, we are especially pleased with the performance of our beauty appliance business, which we believe is now on pace to deliver a third consecutive year of growth behind meaningful consumer-centric innovations. For the first half of the fiscal year, total net sales grew by 5.6%. Sales to the online channel increased by 26% to represent approximately 23% of our total fiscal year-to-date sales. This accomplishment was fueled by our incremental digital growth investments. Leadership brand sales are up 5.5% year-to-date and adjusted diluted EPS increased by 11.7% for the first half of the fiscal year. These operating results give us fuel to further invest behind attractive opportunities for the balance of the year while raising our revenue and EPS outlook for the full fiscal year. As outlined during our recent Investor Day, Phase 2 builds on the accomplishments of Phase 1 by focusing on eight core strategic priorities. With a focus on executing our strategies of doubling down on international and accelerating shared service excellence, we are pleased to announce that we are adding new senior leadership internationally and in IT. To help achieve our international growth goals for all three of the company's segments, we are delighted that Nicolas Lanus is joining Helen of Troy in the newly created role of international president. He will serve on our global leadership team and report directly to me. Nicholas will be located in Europe, focusing primarily on our business and expansion plans in EMEA and Asia Pacific. He will work with the business unit presidents and shared service leaders as he designs and implements next level capabilities in our chosen markets across categories, countries, and channels. Nicholas brings the perfect combination of international and consumer product industry experience. In his more than 20 years in the consumer products industry, Thank you so much for joining us. I am pleased to announce that Harish Rahmani joined Helen of Troy as Chief Information Officer this past August. Harish will be located in El Paso, will also join the company's global leadership team, and will report directly to me. Harish has deep experience as a CIO at several large multinational public companies where he played a crucial role in transformations, working across business units, brands and regions, and building top quality IT organizations. Both Nicolas and Harish are the right additions to our leadership team and come at just the right time for Helen of Troy's Phase 2 transformation. Shifting now to our business units. Sales growth in the quarter was led by our housewares segment, which increased net sales by over 22%. Housewares grew in brick and mortar, online and internationally as we gained distribution, launched new products, and benefited from very strong points of sale and store traffic at key retailers. Dinnerware and food storage were standout categories across the business segment during the quarter. Hydroflask's popularity continues to climb with outdoor enthusiasts and retailers alike. During the quarter, the brand added further to its leading market position and continues to be a significant contributor to the high-performance insulated beverage bottle category. We made even more strides growing sales in the U.S., particularly the East, and also internationally. We also grew sales in brick and mortar, online, and with new products, including products that take Hydroflats beyond the bottle. We are seeing strong points of sale results, as well as inventory replenishment orders that are in line with the robust sell-through rates for those customers where we have visibility. Additional drivers this quarter were Hydroflats back-to-school purchases, back-to-campus sales across the collegiate channel, and growing popularity among younger consumers in both online and outdoor retailers. In health and home, we experienced just over a 9% decline in core business net sales, which was slightly below our plan as we faced a particularly strong comparison in which the segment grew 20.3% in the same period last year. If you recall, in the summer of 2018, the segment benefited from a confluence of business drivers, including a U.S. heat wave, some of the largest West Coast wildfires on record, new shelf placements in seasonal categories, and Inventory Replenishment following the strong prior cold and flu season. Stepping back to look at the segment's longer-term track record, net sales in the second quarter of fiscal 2020 were 8.7% greater than two years ago in the second quarter of fiscal year 2018. Over the past four years, ending fiscal 2019, the segment has grown at a healthy compound annual growth rate of 3.4%. We continue to be excited about Health and Home's prospects behind Product innovations like the one showcased at our recent Investor Day, commercial innovation, and its international expansion plans. We expect health and home to return to growth in the second half of this fiscal year. In beauty, consumer-centric appliance innovation continues to lead the segment, driving beauty core business sales growth of 9.3% during the quarter. Beauty grew both domestically and internationally. We are pleased to now project growth for beauty in our revised fiscal 20 outlook introduced today. Leading that growth is beauty appliances, which have been growing share in both brick and mortar and online, as the appeal of our Revlon Volumizer continues to build, earning over 10,500 online reviews with an average rating of 4.3 stars out of 5. Strong consumer and retail demands continue to be above expectations during the quarter. This high demand contributed to higher logistics costs and lower operating efficiency in beauties. We expect short-term compression of beauty segment margins as we increase our supply chain throughput and return to peak operating efficiency. As we look at our long-term trajectory in beauty appliances, we are hard at work on its pipeline of new products, on international expansion, and on marketing efforts. Turning to other parts of our Phase II strategy, we are diligently focused on maintaining a strong balance sheet. With our low leverage, we are in a strong position to deploy capital towards accretive acquisition that adds more critical mass to our flywheel. for opportunistic share purchases, repurchases. We are also focused on optimizing our cash flow through a combination of improving inventory management, extending our payment terms, and growing our operating earnings. We are highly focused on managing the complexities of currency volatility, tariffs, rising commodity and logistics costs, intense competition in the marketplace, and continued evolution of the global retail channel landscape. As we have discussed in prior calls, and Brian will address in his comments, we continue to deploy a variety of levers to mitigate the business impact of tariffs. I remain confident about the power of our phase two choices to position our company for continued long-term profitable growth. Additionally, we continue to invest in our associates who come to work with a passion for excellence as we deliver its value to consumers and customers, as we deal ethically with suppliers and as we support our communities. Focusing on delivering for all stakeholders has been a hallmark of Helena Troy throughout its transformation, and we are proud to continue that work. I will now turn the call over to Brian.