Helen of Troy Limited

Q3 2022 Earnings Conference Call


spk_0: what we do that helen of troy third quarter two thousand twenty two earnings call at this time all participants are in listen only mode a question and answer session will follow the formal presentation but he wants require operator substance during the conference please press start zero on your telephone keep it as a reminder this conference is being recorded i would now like to turn the call over it jack chance and senior vice president of corporate business development thank you you may begin
spk_1: regular reader the morning everyone in local known for a third quarter to school twenty two earnings conference call uganda for the call this morning in his house i'll begin with brief discussion abou looking statements if you doing in a bird the company feel who comment on the for needs to be cool and specific programs in or strategic initiatives then the command osbourne the company see a bone you read the financial be more detail in comment on the company now month from his to twenty two following his will take questions you have for us today if kopitar may contain certain for looking statements better be a management current expectation with respect to future have been been you to performance generally it wouldn't it be the we expect in other words similar are worthy ten point forward looking statements forward looking statements of seven to number of risks and uncertainties they could cause anticipated edelman's don't differ materially from the actual results he's conference call me also include information that may be considered non gap financial information not get measures are not an alternative to get my name's on the nation and maybe calculate differently than the non gap financial information disclosed by other parties the company cost and work and or is not the place undue reliance and old looking statements were nine gap information before i turned the call over the misremembering i would like to inform all interested party that a copy of saturday earnings really has been posted to the investor relations section of the company's website at www dot of literally dot com the earnings release contains table they reconcile non gap financial measures to their corresponding gap is measures the relief can be obtained by selecting the best relations tab on the company home page and then press releases tam i will now turned the conference call over the mr member thank you jack good morning everyone and thank you for joining as i'd like to wish everyone a happy healthy and prosperous two thousand twenty two during today's call i will review our third quarter results provide perspective on the higher revenue in a ps outlook we announced earlier this morning and update you on how we plan to use our strength our strategy and are operational playbook to continue creating value in the back half of faith to on a core basis for both a quarter and here today we're pleased to report that we grew our fail and adjusted by looted earnings per share compared to the prior year period despite their best really difficult comparisons vs last year and this year's made your head when than broad scale inflation supply chain disruption and the pm matter we see this resulted a strong testament to the power of our transformation flywheel the quality of our diversified portfolio of leadership brand the effectiveness of our inflation mitigation tactics and the strength of our organization as well as the power of our culture looking specifically at our third quarter all three but the segment exceeded our expectations we delivered consolidated net sales growth on top of last year's thirty seven point one percent third quarter increase and delivered core adjusted earnings per share grow on top of last year's twenty one point one percent third quarter lift these result in a positive trend with people our business in the fourth quarter allow us to now raise our top and bottom line outlook for the full fiscal year one consumer and retailer demand have helped drive double digit poor sales growth and housewares than didn't beauty and in the third quarter it came on top of their double digit sales increases in the same period last year while help him home declined it to performed above our expectation due primarily to stronger than expected the man and faster than expected completion a rework for certain products impacted by the be a man online fail declined approximately seven percent in the quarter reflecting similar channel trend to those we saw in the second quarter drivers were the impact of the be a matter and rebalancing a brick and mortar and online shopping habits compared to a year ago even with more of our failed in the brick and mortar channel this quarter online represented twenty three percent of total sale in the third quarter looking at our online failed on a two year stack our failed in the channel had grown approximately twenty four percent of the third quarter of fiscal twenty now looking at bottom line performance core adjusted a psp three percent on top of last year twenty one percent increase despite the headwinds i mentioned i'm very pleased by the excellent with execution across our organization as we work to mitigate those headwinds and deliver grow over the particularly tough comparison period he component of that work has been making the tactics and are operational playbook successful as disgusting prior call those include a strict strategic increase in inventory leveraging of pre negotiated see for a container rates several efficiency and cost control initiative and price increases our inventory position has proven to be important providing a competitive advantage in addressing inflation supply chain disruption and increased demand from consumers and retailers okay a capital deployment on december twenty ninth two thousand and twenty one we acquired osprey packs highly respected pillar in the outdoor industry and a global leader in technical and everyday packs we continue to put our balance sheet to work on selective and strategic emanate which is important as a part of our phase to transformation strategy
spk_2: the osprey deal mark yet another major capital transaction so far and paid to follow in the dry bar acquisition of the beginning of two thousand and twenty
spk_1: the revlon life and transaction at the end of two thousand and twenty and various opportunistic share repurchases with the in the previously announced new distribution center now under construction for housewares we have committed to deploy over one point two billion dollars of capital during the first three years of faith to
spk_2: that's more than what was deployed in all five years of phase one combined osprey will amplify or outdoor operates it will add an iconic nine leadership brand compliment and diversified are world class portfolio and it will add more critical mass to apply when
spk_1: with more than half of it failed outside of united states the brand increases our international present especially in india and asia pacific the to international regions where we are most focus
spk_2: he believed this acquisition of the classic story of to companies that are better together
spk_1: binding the palin capability authenticity and credibility of this you've been out to a pioneer that our global footprint and of the global shared services creates opportunities for new efficiencies a new growth
spk_2: he also believe there are attractive sales and marketing opportunities between osprey hydro flat and the growing outdoors line up for och so all of which served like minded consumers with premium products and the financial side we expect osprey to be immediately a creative to nearly all of our key to follow dated financial metrics
spk_1: would now like to touch on the result of our business segments for the third quarter
spk_2: elsewhere had a very strong core posting net sales growth of ten point seven percent on top of twenty one point four percent growth in the third quarter of last year
spk_1: oh doc so and hybrid by delivered solid organic growth reflecting both domestic and international spring fat storage electrics and drink were made healthy contributions to the quarterly growth i took last especially strong growth in the quarter sweetened the mix improving the margins for housework the man broxtowe remain strong as the corona virus pandemic and doers consumers have settled into routine the continue to involve a lot more home cooking and a greater need to organize clean and supply their households you believe these habits you're likely to remain sticky even after the pandemic up to continue to be a brand of choice for new and younger household who discovered the joy of cooking and nesting during the pandemic as well as for more established household it have become familiar with even more about those exceptional products and the brand's overall promise of better retailers responded to the strong pos drain by replenishing inventory and pulling forward by in anticipation of supply chain delays that's strategic inventory position i mentioned earlier allowed us to meet that demand and contributed to access road compared to some competitors who face delivery constraint in out of stuff it's appreciation of and the man or a brand further improve boxes overall share performing as measured by third parties indicated data in many of the us kitchen gadgets category that it competes in internationally actual also do that particular strengthen amia in latin america and in asia pacific with new distribution and south korea and in the philippines i took that saw shared wrote and broad based strength across brick and mortar retailers increased ordered after a much stronger back to school be them to replenish pos meant momentum and to remain in stock ahead of the holiday season online failed also contributed to hydro thats world particularly in the direct to consumer channel we are pleased to report that the investments we have been making and see a paying off by allowing us to meet the much higher traffic and improve year over year conversion or improved online platform held up well with the pressure test the record sales on black friday
spk_2: internationally get bad saw growth and all geographic region particularly in canada
spk_1: new product introduction beyond the bottle also contributed to grow including hydras last month the new sizes and insulated jars in child and adult size concept of bringing the safety of home to offices and travel location role new demand for food storage and beverage bottom some consumers went back to opposition school with in crete their travel early to beauty on a core baby failed coup seventeen point one percent in a third quarter remarkable achievement considering core beauty grew seventy seven point seven percent in the third quarter of last year
spk_2: revlon dry bar and hot to the game lead the growth and beauty with demand increasing across all channels driven by more activities such as social gathering back to off his back to school
spk_1: i want that volume years and are waivers continued to see exceptional demand driven by increases in household penetration further new product innovation and expanded distribution a testament to the continued popularity of revlon one step volume misers amazon call them out along with apple airport and fire tv stick as among the best selling items driving their record failed during the critical period of black friday to cyber monday recent new product launches continue to extend the ball you measure franchise and sweden it makes but to the recently launched revlon plus which brings new features at a higher price point internationally beauty sales growth with even stronger outpacing the overall segment with sprint across latin america canada and email as a result international market shares for beauty continue to grow in the markets where we have visibility to that chair day why bar continued it's momentum driven by expanding product innovation improvement in the brick and mortar channel expanded distribution and the reopening of salons in retail stores compared to the year ago period
spk_2: new product launches continue to generate incremental sales and new distribution of popular destinations like the new all the shops inside target
spk_1: and the news the poorer shops and bad cold are expanding the band's prestige position to a broader demographic third party us indicated data confirms the dry bar continues to gain share in both brick and mortar and online op tools also continued it's momentum the lighting consumers across the good better best spectrum and growing it's market share with the expansion of hot tools when the professional channel to also include retail only to help and home i want to start by providing a brief update on the be a matter as previously discussed we have largely resolve the be a concerns and returning to normalize shipping labels on pure we continue to reduce out of stock and of the major improvements in our us market share which is now approaching creepy a level i am pleased to report good as the end of the third quarter we return to a more normalized level of shipping activity the key model and customers on our honeywell air filtration products eight the rework has been faster than expected you're on track to largely complete the we work on the remainder of the more than four million originally impacted item by the end of february i would like to once again thank and acknowledge the hundreds of hello toy associates who are working tirelessly to help our business recover as quickly as possible
spk_0: elton home declined by eighteen point five percent in the third quarter again ahead of our expectations
spk_1: we faced a particularly tough comparison to the third call last year in which this segment blue approximately thirty five percent behind cover driven demand for health related products such as the monitors and air filtration products as anticipated we saw the adverse impact the air filtration products stemming from the impact of the be a manner even the ups and downs of these categories over the past two years it's helpful to look at help him home sale on a two years back first nine months of fiscal twenty two which include the p a impact will ten percent compared to the first nine months of fiscal twenty during the quarter several areas of health and home grew including unification water purification fans blood pressure monitor pulse oximeter designers as products
spk_2: as the traditional caught cold and flu season started to ramp up through the end of the third quarter we saw incident well ahead of last year's record low and above historical averages who were early to tell when or at what level of incident this year's cough cough cold and flu season will peak a current trend indicated is on track to be well above last year's highly depressed outcome
spk_1: yet likely below historical pre cold it averages the monitors the overall market continue to normalize after the highly elevated code base of last year but our us the mom or market share has grown as consumers continued to prefer our product accordingly are much stronger inventory position improved our ability to meet at preference even the gyrations of the overall thermometer market thermometers or another area where it's helpful to look at a two year stack that analysis shows arthur ordered the monitor sales are up double digit versus the same period two years ago important to keep in mind that our help and home products are winning with consumers and recognized for their excellence this shows up in our market shares in the appeal of our new products and in other measures better design awards move our brand products were recently recognized by the influential two thousand and twenty two german design awards one of our brown know touch plus for had the monitors one an excellent product design gold award and are braun made the last greater earned an excellent product design award in that same category
spk_0: i would like to move now and the international
spk_1: doubling down on international is an important strategic choice and are paid to strategy we are on track for another strong year and remain ahead of the glide path we outlined in our two thousand and nineteen investor better day to create at least a hundred million dollars of incremental organic failed outside the united states by the end of fiscal twenty four learning to our outlook we are very pleased to be able to raise our top and bottom line expectations for the current fiscal year we now expect to grow cornet failed two to three percent over last year twenty five point one percent increase well cool rejected by luna dps four point seven to six point five percent over last years twenty six point five percent increase and expand margins
spk_2: i am proud of the hard work cross our organization to put us in a position to deliver fiscal year twenty two result in line with our faith to average annual targets
spk_1: tremendous accomplishment i'm also pleased that are playbook for managing inflation and supply chain disruption has helped us to mitigate more than two dollars and twenty five cents per share of headwinds from these factors this fiscal year looking ahead with the the same head with him fiscal twenty three so we are continuing to deploy that mitigation playbook are plans include carrying elevated inventory levels new renegotiated be for a container contracts executing further efficiency improvements that we have identified anthem additional price increases beyond those we implemented on certain products during the third quarter the benefit from a price increases we already implemented a being real in the second half of the fiscal year and into physical twenty three we expect release are pistol twenty three guidance in april as part of our fourth quarter increase abby good my remarks on the business i would like to close with important news on progress towards our ears g objectives as part of our efforts to minimize our impact on the environment we final like been committed our company wide emissions reduction target to as beating the science based targets organization
spk_2: it's formalized with our commitment to work with other companies towards the net zero economy
spk_1: we have committed to reducing absolute scope one and two greenhouse gas emissions i forty six point two percent and to reduce absolute scope creep mean how gas emissions by forty two percent i fiscal twenty thirty more than ninety percent of the greenhouse gas emissions kurt occurs to our suppliers and do consumer usage of our products as such our environmental efforts continue to be focused on designing product baron that are intended to be energy and resource efficient including aligning with sanders like energy star where applicable as well as continued collaboration with our suppliers to improve their energy and carbon efficiencies
spk_2: he targeted been a cool a pool by spt we will now be supporting our progress against them on an annual basis an hour he has to reporting this is important work and aligns with our purpose to elevate live and sort together with all our stakeholders and also happy to report their ears t scores from external evaluate
spk_1: irs continue to reflect our progress as one example i am currently rate helen of troy in the third that fall for environmental in the top their south about social and governance we head into the final two month of fiscal twenty two and the back half of phase in fiscal twenty three and twenty four we have a lot of positive momentum looking at our balance sheet operational capability of the caliber of our organization we are excited to continue driving our transformation the bit or twenty three and the remainder of the back half of face to the plan to combine that mitigation playbook with the rest of our proven strategy it include investing in our leadership brands doubling down on international creating efficiency and capability to our global shared services platform deploying capital a creatively and harnessing the excellent the her organization and culture as we have demonstrated this fiscal year and also in the past helen of troy has a track record of delivering result in the faith of obstacles we have consistently performed in part time like this fiscal year like last year when coded first impacted every household an institution
spk_2: and like the two years before that when paris first emerged as a major costs challenge
spk_1: we'll all of these challenges and many more he remained relentless in our focus on building our brand and executing are flywheel with excellent and further elevating are high performing organization and culture to deliver multiyear result that could lead to superior shareholder outcome
spk_3: the that i will now turn the call overcome that a julian good morning everyone and happy new year yeah baby you got a call a result which he did our expectations them both the top and bottom line during the third quarter a beauty and housework he saw number positive trend including strong consumer demand growth in international fail and earlier than typical customer purchases and retailer the accelerated order
spk_1: into the third quarter to try to avoid supply chain disruptions during the holiday season
spk_3: he celebrated all had a favorable impact on the third quarter of approximately fifty nine dollars and fail and one sense of adjusted the needed each year
spk_1: we also began the benefit from recent price increases which are partially offsetting some of the inflationary cost impact in order finally as of the end of the third quarter you have completed a significant amount of we were on the he a impacted unemployed and have returned them more non like level the shipping activity for the vast majority of affected products
spk_3: as a reminder he asked the acquisition close after the end of the third quarter therefore there are no financial results related to that business included in our adult
spk_1: now turning to our third quarter or business that they'll increase your point four percent driven by higher brick and mortar in online channel growth and obedient house was pregnant in addition the strong and humor man international growth and earlier than typical customer holiday order we also benefited from higher sale in a club in production on and the cable bill comparative impact of covenant nineteen with the store traffic and thought back to school even in the prior year period
spk_3: additionally the pricing actions we implemented at the beginning of the quarter to mitigate riding freight and product caught also began to benefit of with further positive impact expected in the fourth quarter and into physical twenty three factors were partially offset by a decrease in failed in health and home segment do
spk_1: stronger covered nineteen driven the man the healthcare and healthy living caught up in the prior year period
spk_2: primarily into monetary and air filtration and the unfavorable impact on air filtration product sales as a result of the uk matter
spk_3: looking at gross profit margin even factoring in the benefit of customer price increase in we still felt the have the impact of higher in paid expand which was the key driver of the one point three percentage point increase for the quarter
spk_4: or as june a ratio was twenty nine point four percent your point one percentage points higher than the prior year period reflecting higher personally than unfavorable operating leverage higher distribution expand additional eg a compliant car and acquisition related expand in connection with the oscar
spk_3: transaction these factors were partially offset by lower pics then we do anyone that of computation expand lower marketing span lower annotation it's than a decrease in bad that expand and the able to leverage impact of customer price be related to rising rate and product costs
spk_2: yap operating income with ninety million dollars or fourteen point four percent of net sales revenue on an adjusted basis operating margin decline your point six percentage points for seventeen point zero percent primarily due to the lower gross profit margin and time period
spk_3: income tax expand the the percentage of income before in contact with twelve point nine percent compared to fourteen point zero percent for the same period last year yeah over your degree in the effective tax rate is primarily due to increasing my ability related to uncertain tax positioning in the prior year period partially offset by shit and the mix of income in a very tax jurisdictions
spk_1: net income with seventy five point seven million dollars or three dollars and cents per diluted share nine gap core adjusted the needed each year increase three percent to three dollars and seventy two ten primarily due to higher operating income in the house where the news segment a decrease in the effective income tax rate and lower weighted average deleted shares outstanding
spk_2: looking at the first nine months about it school year we're very pleased with without know
spk_3: on a core basis we have been able to grow our net failed five point five percent this is on top of growth of twenty seven point nine percent recorded in the first nine months it's the good twenty one and include the unfavorable impact related to be a matter we have also been able to increase core adjusted the needed each yet by your point nine percent compared to pit twenty one which grew thirty seven point two percent over fifty one and include the unfavorable impact the ball higher inflationary caught and eg a matter we believe me they're very healthy outcome given the challenges with a twenty two now moving on to a financial position in the quantity net cash provided by operating to reach for the third quarter is twenty two which fifty three point three million dollars for the nine month period a pit bull twenty two net cash me by operating activities was five point one million dollars compared to net cash provided by operating activities of two hundred and four
spk_2: thirty nine point seven million dollars in the prior year
spk_1: a portion of the cash news by operating activity in a nine month period and that the twenty two was the increase in the toy to help mitigate riding supply chain cough and purchase high demand prior ahead of the holiday evening
spk_3: we expect to further reduce or inventory levels by the end of fiscal twenty two but with our current inventory projection an incremental in a toy from the acquisition of our spray we now expect your and inventory to be higher than where we ended with twenty one as we continue to sell down inventory the also expected to sequential improvement in our operating cash flow in the fourth quarter as provided by nothing at least for the first nine months of the fiscal year with eight point five million dollars you do the procedure the heat from the sale of the person care business partially offset by the capital investments and man and initial construction expenditure and associated with their new distribution center for the housework segment although short and long term debt was four hundred and forty seven point five million dollars a sequential we preach from or hundred and seventy two point two million dollars at the end of the second quarter our net leverage ratio as defined in our deck agreement which nets or cash and cash equivalents without any that was one point three times at the end of the third quarter compared to one point or time to the end of the second quarter now turning to up for your outlook for fiscal twenty two consistent with what we have done in previous quarter this fiscal year my comments will focus on our operation done according to which exclude the result of the entire course not your business and all period in order to provide the best compatibility between historical and teacher period we are pleased to be able to increase or outlook for both failed and dps for that for year reflecting stronger than expected third quarter without the are maintaining our expectations for the fourth quarter in line with that fire outlook despite the impact of the retailer order pull forward into the third quarter and our current expert patients have a lower than prieto that historical average kok cold and flu season
spk_1: we also thought to keep momentum a strong fail in them in december
spk_3: a revised for your outlook also include proximity to month contribution from the osprey acquisition which is included in both are consolidated and core business result we estimate expected impact of the acquisition for the period from the december twenty ninth twenty twenty one closing date
spk_2: to the end of fiscal twenty two to be approximately twenty million dollars with net sales revenue and approximately seven fan of adjustability dps which reflect the typically lower even have failed in earnings for the business during this period
spk_3: a revised out looking creepy an improvement to the estimated unfavorable impact of the expected la salle volume from eg a matter the sales revenue impact it now expects to be approximately sixty thousand dollars and the adjusted the needed dps impact with now expected to be approximately thirty said
spk_1: improvement both to the previous outlet is primarily be a higher than expected shipping activity and water purification products in the third quarter you do not expect immaterial material impact from each year matter on a fourth quarter results
spk_3: we also continue to expect to be able to recover portion of the political twenty two lot failed in learning and fiscal twenty three we now expect consolidated net sales revenue in the range of two point one zero two two point one two billion dollars which implies growth of flat to one percent he also now fact coordinate failed revenue in a range of two point zero six to two point zero eight billion dollars which implies growth of two to three percent and included three percent of unfavorable impact related to the bpm matter excluding eg a matter we expect coordinate build revenue growth of five to six percent or updated fiscal year net failed outlook reflects the following expectation by segment elsewhere that killed growth a fifteen sixteen percent open and home that they'll decline of twenty two nineteen percent including six point seven percent of decline related to the uk matter judy net sales growth of thirteen percent fourteen percent and beauty color net sales growth of twenty six percent to twenty seven percent we expect consolidated gap the needed each year of a dollars and twenty five than eight dollars and fifty nine them and core deluded each yet of a dollar and eight them to eight dollars and forty two cents we expect consolidated non gap adjusted deluded each year in the range of eleven dollars that meet with them
spk_1: two eleven dollars ninety three and and core adjusted deluded dps in the range of eleven dollars and fifty five ten to eleven dollars and seventy five thing which exclude any acquisition related expenses e p a compliant path at that impairment charge charges restructuring charges
spk_3: tax reform shelby county patients then an intangible assets amortization expand a core adjusted deluded dps expectation implies an increase of four point seven percent to six point five percent which includes two point seven percent of unfavorable impact due to the pm matter implying expected year over year growth of seven point four percent to nine point two percent not including the impact of bpm matter this updated mps outlet improve the estimated unfavorable impact of your the inflation costs pressure of approximately fifty five fifteen million dollars are approximately two dollars and twenty five them to two dollars and twenty two dollars and forty five some of adjusted deluded a p
spk_1: we believe we have mitigated much of me cause is a combination of improved by makes fighting created or buying them into a to delay cause impact utilizing previously negotiated shipping contract that rates below current market prices and implementing other cost reduction initiative
spk_3: we expect it to twenty two poor gap effective tax rate range of twelve point eight percent to thirteen point eight percent and a core adjusted effective tax rate range of ten point six percent to eleven point five percent consistent with prior expectation you do not expect
spk_1: a meaningful impact from currently proposed tax legislation changes and bit good twenty two we now expect capital asset expenditure of eighty five to one hundred and ten million dollars for this got one it you which includes expected additional expenditure is related to a redistribution facility for the house with segment we continue to expect the total cost of the new distribution center and equipment to be in the range of two hundred it
spk_3: two hundred and twenty five million dollars spread over fifty years twenty june twenty three in summary on a core bases including the impact of bp matter or revised for your outlook by net sales growth of to present the three percent on top of the twenty five point one percent growth in it for twenty one i'll bite or your outlook for the housework segment replied net sales growth a fifteen percent to fifteen percent on top of thirteen point five percent go in the prior year
spk_1: or beauty tellement course they'll outlook implied met a girl of twenty six percent to twenty seven percent on top of thirty nine point five percent well in a prior year and although help and home segment in forecasted to have a net failed decline a twenty percent ninety percent including the impact that eat
spk_3: yeah matter it grew twenty nine point nine percent in the prior year or just below the dps on a core basis including the impact of eg a matter of revised or your outlook implied growth a four point seven percent
spk_1: it six point five put that on top of growth of twenty six point five percent and pit bull twenty one eating the expected contribution of osprey the implied road at the high end of our outlook range on a code basis
spk_2: it two percent burnett they'll and six percent for just included a pf only slightly below or long term growth target additionally we expect to be able to expand core adjusted operating margin to the fiscal year by thirty to fifty basis points ahead about long term growth target these results are quite an accomplishment when we consider the hi baby pickle twenty one and the fact that we would go up over two dollars and fifty cent earnings per share related to inflationary cost increases and eg a matter in the current fiscal year
spk_1: and fifty twenty two a team has done an amazing job of navigating the high court environment by utilizing all the tactics in our playbook green the ball were buying the been employed which helped that the first some of the higher input costs out of the first half of it got one too as we call again on the end of the fiscal year and look ahead with this for twenty three we are prepared to pay inflationary costs challenges ahead
spk_3: and fiscal twenty three we expected born year of incremental inflationary cost pressures in excess of what we have estimated impact of into the twenty two
spk_1: we are currently in the middle of october twenty three budget partners and are working hard to mitigate as much of the expected to twenty three inflation as possible and to deliver quarter earnings growth
spk_2: he will also benefit in fiscal twenty three an impact of the osprey acquisition and are strong balance sheet cash flow and low leverage provide further opportunity to strategically deploy capital for shareholder return as we head into fiscal twenty three and be on and with that i'd like to turn it back to the operate
spk_0: a the question thank you we will not be conducting a question and answer session the would like to ask a question please press star one on your telephone keep that a confirmation chocolate cake your line and the question killed in a press start to up you would like to remove your question from a you for participants you think speaker equipment and maybe not fair to pick up your handset before pressing the starches we have but you please limit yourself to one question what follow up question and every q for any additional questions one moment great hobby paul for your questions our first questions come from the line up bad la with yeah
spk_5: curtis please proceed with your questions
spk_1: good morning it congratulation controversial from outlook
spk_5: thanks good morning that great to hear from you and to be hurt by period yes how each fun the game for nice our country details it's a nice to talk on international i was hoping to dig a little further i'm as it relates to your pockets of strength or maybe i'm an accurate three lagging in international first is your face you goals and expectations i'm a and also rafat in with osprey how does the acquisition
spk_1: to help your international group and other brands i know how it impacts the percent of sales international but our help other brands grow internationally as well your and yeah international the big deal with we called it out a bunch of times as as strategic for as given the double down on international focus for phase two years to very large projects in the company one in europe why in asia to drive that and i think everyone knows that structurally we put a president in place am a rubber almost two years ago to oversee those regional markets on top of what we had before and that shielding some pretty significant results and your question about a little bit more color and what's happening is that bam beauty has a i'm gone from a laggard internationally that frankly wasn't making money and didn't have much presents are too now a business that is on fire making big growth big money big marketshare games and value miser was the beginning of it but now it's expanded in all the same way to the u s of think of it as your year so behind the us in terms of is trending in the case of help him home it continues to demonstrate excellence in europe amen
spk_2: it's always been strong in asia or that said the thermometer ups and downs not make itself as as what we called out the two years back to show that in total but not just international health and hallmark or ten percent even we're on the be a stuff i did to get people to perspective does about about artillery and then on the house where side and the research
spk_1: about worse in europe including in the uk a big deal or any like we called our expanded distribution this time in ages best in the philippines and south korea opera housewares which is really helping if you step back and look at the whole thing what you're getting is a business is adding significant margin on top of where it was in the internet
spk_2: national when compared to the beginning of phase two and a result of that
spk_1: or is a big desire to further investigate can lean into the the a strong the the strong as they say i'm so this is driving us to do more and were already planning that for fiscal twenty three on top of what we did this year and remembering cute for last year we put a big investment in to europe's to prime the pump so to speak to get the result
spk_2: that we're now reporting and lap the on international i i would say that the acquisition stuff makes a big deal to your question on the acquisition or everyone knows on the call already that half of ospreys outside the united states plenty of that in europe and so what it'll do is it'll accelerate our footprint it outdoors and open a possibility of have many more doors that hide or osprey is already in hydra flask and osprey really believe are a natural together it's one of these better together stories and we think that the impact on
spk_6: hi to flat and osprey and frankly hydra but also to osprey outdoors outside united states is is an untapped synergy of the acquisition we also think that oxbow so as it makes its own advances outdoors has the potential to join that party because it's the same consumer and in some cases the same
spk_2: customer services is good news to retain that especially in henri i in the united states and we intend to reapplied the mom and in the case of ospreys capabilities there's just a lot of great people that were now meeting in person and steady as she goes with the acquisition close and that gives us the chance to tap into their capabilities in europe and particular in pool england
spk_5: in asia based out of their vietnam organization and have vietnam organization also has the capability to add salt good know how and a southeast asia beachhead upper us faster about other parts of helen of troy and latin america we haven't turned the rock over by as much outside and on have as much to say in that region in canada we manage more collectively as part of north america
spk_1: okay great that super helpful thanks and then is for my our trash second question i'm wondering could you talk about what changes in consumer behavior of emerged from the pandemic that have created opportunities and new products her for on trying for your brand's and and how does the fiscal twenty three new product development stack up vs prior years yeah and woodwork consumer centric so i love this question and we spent a lot of time on staying close to the consumer am as we said not prepared remarks there and nesting behavior that we have seen as been pretty sticky and i say that because even during the brief interlude between delta and army cron you saw the reason
spk_2: felt that we were able to put up during that period of time so we we seem that consumer sort of rediscovered the the joys of home so to speak even though everybody feel cooped up and restricted and all the bad stuff that goes with those add to the behavior and we've also seen that people am have no problem investing their money and like their spendable income into improving the quality of their home world so whether it's storage
spk_0: an organization stuff cleaning stuff that kitchen staff and this has been very very good for us as the consumers household get penetrated that rabbit a fact that we often talk about an ox so i guess multiplied so beep or just because the products or penetrated the new household and they start filling the drawers and remember play
spk_2: any people mood during the pandemic because they were getting out of some of the cities and those your bigger houses so we'd be see those kind of trans and we also see people super attentive to their health so in the just everyone's radar is up a couple of clicks vs free pandemic so when you hear words like fever air quality on change filters these can think of it always and triggers are people that now more more than ever and then obviously affects our health and home business and then consumers and yeah i've never met a woman it as want to look good and bad has not changed despite people being more at home or in the pandemic and that reflects on our beauty business regardless of salon closures et cetera so makes a big deal and then last the i would say on the ah impact it has for or the future i will we have product development in place to keep going in that area so for example the on the goal line from acceptable doubt i'll just have the right time because people won't take that safety of home or that can perform that i'm describing a with them even if it's back to the office or i hybrid or whatever their model is back to school said helps hydro flash to on on all of that and the case of the adam channels we just see a bit more balancing between online and brick and mortar and we call that out and our press release as well as and in my prepared remarks today in order for people to understand that that there's a balance their online is still huge for it's twenty three percent entire company that's like a half a billion dollars worth of sales on the one him on the other hand a brick and mortar is not dead five years ago everybody talking about yellow brick and mortar make it a brick and mortar is is doing screamingly well i'm that that channel rebalancing is occurring last point on channel does
spk_5: direct to consumer direct to consumer is taking off at major trend you seen as invest in it frankly been a little slow ah and that said we're coming up fast or in our ability to customize our political fill in the state of the art stuff that we're investing in that new house where of where's warehouse one that we are putting all the money into you're gonna have
spk_7: have the best of the best and that that will help us a lot on that direct to consumer channel and the customization
spk_0: okay super thank you so much
spk_8: you bet bob rae questions thank you are next questions come from the line lineup repast for eat with up and please proceed with your question
spk_1: according to extricate i question also got on a really nice quarter
spk_2: thanks i forget i i guess i first questions are you look at yourselves base exiting the here you believe it's now barrier reef watch them underlying demand or or do you think there could still be some normalization certain categories as real as we going to next year
spk_1: it and they said pick it up and down answer i would say with fashion the reason i say it is because as as good as we are on having more inventory they're still in demand left on the table ah that's out there are because it's hard to have all the right things and all the right places all the time in such a surging environment and with the supply chain interrupt
spk_2: and so they believe it or not even still some unsatisfied demand in the marketplace so they have another way we could be selling even just a little bit more than the the growth we just put down and then it turns out on the go forward this some rebalancing going on like that that monitors ups and downs that we were talking about and there's that
spk_1: reality right now which is the cough cold and flu season while it's amazingly better than last year but it was so poor last year i probably will be below the pre kobe average and then last the there's some bp a rebalancing going on what i mean by that is that this year was rough because of all the ups and downs of that
spk_8: and now as we shipped back into that suction for our products was busy benefit and into next year that that will be a good guy so a lot of ups and downs perhaps the best way to think about it just a step back from all the chatter and and just look at the big picture and and the big picture is then we believe we're going to grow in fifth school twenty three our revenues on top of the base that we just at gave outlook for today i'm in line with the multiyear averages of our phase two goals so it lets you just sort of cut through it all and say this company gonna grow next year i'm it is our expectation
spk_2: okay great that's that's are very very helpful color and then just a as this one ball question for the guidance this year and help him home there was a reduction or slight modification under help him outside on
spk_1: can you as an hour to go low lowering of the range and not even with the gays routing is more impact really just a more on their interns that would change on help and on saddam and the gotten range yeah to two things what one you've already called out it's the lower half of what was a two point range i'm so it's true that we said it was eighteen to twenty percent decline in the queue to release when we gave that outlook and here in the queue three released with our improved outlook were saying is nineteen to to
spk_2: twenty percent decline so that the two point range and would we pick the lower half and you might think wow with the be have been getting better why did you pick the lower half and the reason is because the cough cold and flu season it when we projecting you to was expected to be in line with historical averages it's now likely to be below historical as
spk_5: bridges but again importantly way better than your though so if you're comparing vs year ago you'll see a tremendous gain that if you're comparing on a forecast basis when we only saw historical averages in the in the front of us on it's a small decline as a while that's gonna be a big deal on the answers now it's exactly within range that we project before
spk_1: or it's just in the lower half of that range by a single percentage point
spk_9: okay great every repeated one quick one just on the cost pressures well on your costs pressure had when i went down vs last quarter but then it's not like next year you guys are expected even higher cost pressures so he destroys the do they have been a call on during that reduction turns what you're expecting this year
spk_8: yeah let me try understand it you're you're saying that it can take on predator i can take on yeah go ahead man known passion right and you know it's it's really just kind of we moved around a little bit you know without move the range down about five million and just as we can look at their inventory and car how can play out and some another thing to reflect you know better inflationary costs and some wages than labour and things like that so just a little bit of all of a wiggle i would say nothing big in terms of our our outlook for this year and then i think you read the right message into fiscal twenty three in terms of kind of our overall general expectations were we see
spk_2: pos trending for next year
spk_1: okay great that you brother god obama and one quick follow up with that from the cold and flu step i wanted everyone on the call has the right impression on that that the incidents it is is growing and growing considerably in fact we we've just seen most recent data as of this week and are are still or he was looking quite good are real orders are looking good arms
spk_10: i don't know if it's on the ground purchases you people the the humidifier at the monitor something like this
spk_0: but we like what we're seeing in the trade on but the only difference vs will be out in the queue to was the difference between average and a below average total outcome
spk_11: great thank you
spk_12: you bet
spk_13: thank you our next question come from the line of like about wiser with the a davidson please proceed with your questions
spk_11: now and then left hello hi how are you doing good hi nice to talk to you yeah same here
spk_1: so no
spk_2: i think when you were talking about the u p i impact on health and home you said you expect to recant war or sale of those they'll in applied twenty three i guess i'm questioning why that porch that why wouldn't you be able to kind of recover a like all of the sales and going along with that could you actually qualify for as the u a impact and help and home say out in the second quarter and in the third quarter thank you yup yeah let me take the first one and are all big the that would be best for the the second one i'm in the case of the portions versus all and there's kind of an academic thought on this and a real world thought on this now we've spoken about it in prior quarter to are in the academic world you'd definitely would get add a on and he any test the saying okay if it was impacted in one year and you gotten the clearance from the he be a to do the rework and larger than the rework and you kept the customers that don't you get it all back just a year later at the academic answer the real world answer is that there's all kinds of shuffling going on think of trade him mentor is that have moved around a lot to there's a lot of replenishment going on right now i think of consumer demand that wiggles shelves that have been set and reset and now reset again or as we played into the mix or with what we've been able to ship versus what we had to rework and then think also of
spk_1: consumer loyalty and filter repurchases competitive moves et cetera so in a real world if it's not a black and white and we think will get the vast majority of it back that's the good news but them there should be a year over year gap and will just work on closing it and in the case of spend thing and we obviously reduced our spending during the period when we were not shipping and then some cases not on the shelf and competitors did not and so on we have to spend to earn back our market share i'm just like we we did on pure and with with largely accomplish that on pure to the now has to happen on air purifiers and on the subject to the competitor there's just enough update that people always ask which is your wouldn't others be affected by this in the future and we have seen evidence in the marketplace that's other companies and we wouldn't name any particular ones are experiencing some inquiries from the be a going through their version of the same story
spk_4: so that creates opportunity in the future should they have to run the gauntlet as well
spk_13: and limited to follow up on and your second point in terms of the impact you thought kind of improve our our overall impact for the year and while we haven't given out in the quarter the specific impasse by quarter think the best way to think about it is we said there's really good not can be a material impact
spk_11: the ph you for and it wasn't really a q one issue just in terms of the the timing of when the issue around so it's mainly due to cheat reissue and if you remember and you to you know we we had shipping restrictions on air and water by the any que to we we largely rudolph water so cute three was mostly and air impact so i gonna take the sixty million in and kind of now roughly sprouted between key tearing que three your knowing where we had more shipping restrictions and months or shipping restrictions and that's about the amount of guidance we
spk_13: we've given on it during the years i hope that helps
spk_2: okay
spk_1: thank you and then within i get from the growth in marriage and you know there's a lot of moving people and here you have mitigation a fact many of price increases going on if you do
spk_9: qualitatively try to explain where you think that world's margin might bottom out about a clamshell beat that
spk_1: do you think it's in the fourth quarter or do you think that happens more in the first half of that like twenty three
spk_13: say mad dog you think is actually a good question
spk_14: linda and you know unfortunately it's probably one of those thing that that i'm not can give you a super specific answer because they depend on you know future trends though of what's happening with
spk_0: i'm afraid and an inflationary cause when i can say is in t three you know we got a lot of price increases them play not all of the ones and so will continue to benefit from know is more and you for than and que three sequentially and men as we look into next year you know
spk_15: we look at you know ways to continue to mitigate higher cost environment or a concrete to they still in our playbook and something that we be looking out again so hopefully were able to continue to improve our pride concrete that compute really cute for and the impact from that would be more favorable and then into next year
spk_16: we're looking at more price increases that would help us i think that's the the benefits i'd the the tough time for us to have a crystal ball on his next year's you know cost profile and what's happening you know the year progresses with the with inflationary rates so a big improvement sequential let me look at this year and next year we'll probably have no more thoughts on that as we get term budget process
spk_17: okay well thank you very much i appreciate it
spk_1: i think that banks linda happy new year
spk_16: thank you our next questions come from a lot of state marotta with see okay for see with your questions the more i feel
spk_2: more yeah morning that to morning jack that take my question must have been asked and answered are only are limited to one trillion maybe you can comment a little bit on current logistic challenges and how weird it stands at this moment in time and where you see that an improvement in the next calendar year if that's you can quantitatively measure it weird either weeks behind or none at all or specificity there would be helpful thanks better understand it up the you can scan one more out of the question itself
spk_1: just the supply chain i issues and then you're experiencing right now and and
spk_2: i'm going to containers you have often have the power to be numbers do not going to give that number of agree but if you get yeah talk a lot of it about where it stands now and how you see improvement over the next three to yeah well now yet it yeah thanks thanks for clarification yeah i think that the short answer is were not amused but we're better position than others so we were subjected to all the same factors that the reason we're better positioned is because we have more inventory and because we have been able to pre negotiated
spk_1: this was see freight contract so the impact the us both in time and cost and out of stock and all of that is is mitigated and it's it's been successful for us you heard as make a lot of comments about it i'm in terms of the flow of products if it's fairly reasonable right now we're we're able to bring in
spk_18: what we need we have enough of the right stuff almost everywhere is a few exceptions to that always and that that's true now to and then the current to the ability to
spk_8: handle it all you know it's a lot that that do that in our warehouse it's one of the reasons that we're building another warehouse and will do some pretty significant shuffling over the next couple years or to optimize the entire our footprint to the point where will be on recognizably better by the end of phase two on this in able to handle not just
spk_2: have but also new stuff as we buy it like like aspirin and an integrated and in the case of the growth and what we're talking like his company is more than forty percent bigger than it was four years ago and that before osprey and before the growth that we're set on today's call that we expect to put down in fiscal two thousand
spk_1: three so we're better shape and in the case of their specific site right now to your question on reasonable the short answer if you looked forward
spk_2: for next year we as we said not prepared remarks what we have pre negotiated new see for a container contract and will carry a bit more inventory next year to try to run that same playbook again because it more this to come and so that's that's where we are so let's gets a lot worse we're going to be okay but any the out there and that playbook works billionaire properly and i do have one more question given a massive attack an air filters in water filters and thermometers last year and a consumable that are associated with those product lines are you where you want to be higher margin consumables of course are you where you expected to be at this point in time
spk_17: when those consumables on units and have already been purchased are you a little had are you a little behind maybe can a comment or where you are can currently on those consumable thanks
spk_2: it it's about right at i think is the answer so in line and i don't have a lot of specific data on it but i can say that in general it's about right and what what's driving it is a lot of different factors start with wildfires that there was a lot of that last year and what was available in the marketplace when we were in the darker part of the a p
spk_0: a period and was sold through and we're glad that consumers were able to get a hold of those bill cause they needed them and we were very hard to get those into the marketplace as quickly as we can be worked them on and so they were gobbled up i a given that personal appeals from consumers on in as i please please please i need any that he'd and we did stuff like scrounging ah our own you know classes to define them i'm so it we found found ways but only once they will be work with me put them into the marketplace and in the case of the
spk_19: i have next big driver it's the cold and flu season at the big deal where in the kind of an indoor time it was the allergies the fall allergies the just path and and while we don't make any specific good claims and everybody's trying to improve the quality of their indoor air so these are the drivers and i'd i'd say we're be in line and it it's good
spk_8: and we like the loyalty we like serving people and we like making sure they buy our filters because they're the the best ones for our products in the ones we recommend
spk_2: super helpful thanks i'll take the balance offline fine thank you again he that thank you
spk_1: thank you our next questions come from a lot of anthony it is good for him but your questions
spk_2: hey i'm playing have been here in usa i didn't like it happen here to all as well so i know this may be a difficult maybe question a dancer but as far as the other cranberry and yeah a bit started really at the tail end of your third the school quarter now there were a few weeks into it and now to just do what is your stance the how that to your business has that impacted the anything meaningfully or what what is your expectation a war that yeah it's it's always tough to reconstruct the t things apart and i'm so not so much about it in a short period of time it's more just mix with a lot of other stuff so that the short answer on this one is adam cole had really sucks every time to get your head above water you do find some other reason to to be afraid so not nobody likes any of this in the case of what it's doing to the business and there's a couple things happening and that worse it's hard to quantify any of it that the sales that we just saw in december
spk_7: we were very strong a map mention them in his is prepared remarks i can't say that they're directly linked to on the cry can just say that if anyone on the call is worried about the pulled forward for the holiday our supply chain stuff into que three they they should not be and the reason is a sales was strong in december of the we like our
spk_2: prospects for january and february and see we just raised our guidance and and floated all through or said another way held argue for outlook despite the que three feet and despite the the ball forward into key three so that's not confidence in on the current environment i don't know what is and then in terms of ah micron itself on consumer behavior it's hard to know people back home a little more there's fewer kids in school and all that stuff on the one hand on the other hand people are now two years into this and they know how to navigate a little bit better all that mess being and home sticking a stuff will just be more so that i guess good for us and in the cold and flu or
spk_20: world i can't really say what it's going to do and maybe people have trouble distinguishing between the article on symptoms which be like that and the normal cold and flu stuff so that the of my get some conflation the data you either way we'll keep providing the health related products that people want him as i said before two batches question we're just seeing good
spk_2: sell through of things like humidifiers right now even with the cold and flu season picking up i can say if it's army gone or the more the others that are driving i the people want to be safe gotta understood and and it's as far as the just it's the followup up about the pulled forward and was that the in the and each segment always dirty one segment that they you saw more than others as far as that pulls over the buying by retailers and the quarter
spk_1: what would you say map at it yeah anthony we thought mostly in in beauty and and housewares and i would say can you not to third house where one third beauty kind of a thing
spk_7: but the more give them on is involved especially if think of all those hot here too that people want and there's alba the home
spk_19: type of product that often end up under the under the christmas tree so that some
spk_2: that's probably what's driving it and retailers themselves in i think they surprise themselves broadly that they did a good job of handling or that issue and and then spread out the purchases
spk_1: deal between black friday and and christmas so it was more of a month of it rather than two weeks of it and so we were able supplied a little bit better and on the did you see side as i mentioned in the prepared remarks and we just saw really good business and and all those investments that we've been talking about an hour flywheel for last two three years and keep paying off now as as we
spk_2: ear pressure tested by big searches like that and our website and warehouses you're able to handle it and then it's good news so i would worry i would worry about the put forward gotcha her and as last question about the just about nick deleon subs are obviously on the costs are the businesses lot of put some take sell it for the inflationary cost pressures and you quantify that but you're in terms of the cost reduction initiatives
spk_1: know what where when you look at a different buckets of they cost reductions of you which ones are kind of the most sustainable you think kind of going forward or as we look forward to fiscal twenty three yeah yeah i love this question and when it comes in the the the abroad call here opposite put it right the public record and that the attacking our costs as is been strategic for us to the transformation for years and years and what happened is we have pulled massive amounts of passed out by going to to global shared services by investing in all of these capabilities and then right now in each of the three business unit there's large lot like
spk_2: eight digit large cost savings projects over multiple years yet to come to think of the back half of face to and each business unit having big project to take advantage of the opportunities that we've identified not all of it comes right away and some of those benefits will just get sliced a ways off that to the rising inflation that we have to confront along with everybody else but there's there's big savings a headset to get there and in terms of our drivers automation is a big one i'm finding further optimization within our supply chain is another big one and then the labor costs because they've
spk_14: risen have made pay outs of projects around d c or warehouse type of automation much more attractive than they would have been at much lower wages like only a few years ago and so all of these create new opportunities for the future some of that does require some cap actors map pointed out but it's worth it
spk_2: it pays out and it's it delivers for us over a long period of time so we're pretty excited about the cost savings opportunities that they don't get the idea that it means we magically gain ground it just helps us further offset and then we can put down some games the this year is maybe the testimony to it matt mentioned in his room
spk_0: marx that we would put down roughly fifty burps oh margin expansion this fiscal year in the outlook we just provided if you look at the twenty to thirty bits per year targets that we put out for phase two that two years worth of games in a single year and not just any year in the head
spk_2: the year where there was so much inflation and so much supply chain disruption doesn't mean you get that in fiscal twenty three and this between for it just means that meets and argue that there should be some confidence that the savings projects have the ability to deliver and if we can grow our revenues on top of that and get operating leverage which we specifically said earlier in the college aren't any to grow redwood revenues invisible twenty three at the average annual rate of the
spk_0: i'm phase two goals or try to do better and then for fiscal twenty four while it's hard to project that far out it's our intention to do it again so there's some operating leverage and all that is before acquisition which creates more operating leverage and to synergy opportunities with new kasabian projects so that the flywheel effect and we see it very much intact

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