Helen of Troy Limited

Greetings and welcome to the Helen of Troy fourth quarter 2023 earnings call. At this time, all participants are in a listen-only mode. A brief 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. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jack Jansen, Senior Vice President of Corporate Business Development. Thank you, Mr. Jansen. You may begin.

Thank you, operator. Good morning, everyone, and welcome to Helena Troy's fourth quarter fiscal 2023 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 Minenberg, the company's CEO, and Ms. Noelle Chavois, the company's COO, will comment on business performance and key accomplishments and then provide some perspective as we begin the new fiscal year. Then, Mr. Brian Grass, the company's incoming interim CFO, will review the financials in more detail and comment about current trends and expectations for the upcoming fiscal year. Following this, we will take questions you have for us today. This conference call may concern certain forward-looking statements that are based on management's current expectation with respect to future events for 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 financial measures are not an alternative to GAAP financial information and may be calculated differently than the non-GAAP financial information disclosed by other parties. The company costs its listeners not to place undue reliance on forward-looking statements or non-GAAP information. Before I turn the call over to Mr. Minnenberg, I would like to inform all interested parties that a copy of yesterday'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 press the releases tab. I will now turn the conference call over to Mr. Minenberg.

Thank you, Jack. Good morning, everyone, and thank you for joining us. We have a lot to share with you today. I will start with a few comments on the CEO succession plan for 2024 and recent changes at the CFO level, then turn to the business results we posted yesterday. I will also give some perspective on our outlook for fiscal 24. Our Chief Operating Officer, Noelle Jafois, will update you on the considerable progress we are making on Project Pegasus, provide more detail on segment performance, and touch on how we are approaching our next multi-year strategic plan. Brian will comment on our fourth quarter results, financial position, and on our fiscal 24 outlook. He will also provide his perspective as he returns to Helen of Troy as our interim CFO. For our press release yesterday, I intend to retire at the end of February 2024 when the term of my employment agreement is set to expire. The board has appointed Noelle Jafois to succeed me as CEO. This timing provides continuity through the end of this fiscal year. March 2024 will mark the end of phase two of Helen of Troy's transformation plan, as well as 10 years in the CEO role and 34 years in the consumer products industry. It will be my turn to slow down at least a bit, spend more time with my family, and focus on some personal priorities. I will be working closely with Noelle as we execute our transition plan. As it relates to my board service, the nominating committee will finalize the full slate of nominees for public disclosure when our proxy is filed in June. I do expect to stand for reelection at our annual general meeting of shareholders, which is in August. Regarding continued board service, if I am elected, my 2020 employment agreement calls for my resignation upon retirement per standard practice. There's no current plan beyond that date. The Board and I believe the company will be in excellent hands under Noelle's leadership. She has proven herself as COO, including her leadership of Pegasus, and is already providing a further step up in our brand building and go-to-market capabilities. Over the past year, she has also overseen the work of our business segment presidents, C-level operations and IT leaders, and has been learning all aspects of Helen of Troy's day-to-day business. She brings more than 25 years of outstanding experience across several consumer products businesses and multinational organizations, including Sanofi Consumer Health, Kellogg's, Heinz, and Procter & Gamble. She also brings a track record of creating growth and driving operational excellence in matrix organizations like ours and a passion for building world-class consumer-centric brands. She has a reputation as an inspirational leader, making her a natural fit with Helen of Troy's culture. Noelle will become the third ever CEO in Helen of Troy's 55 year history when she takes the reins next year. The company is well positioned to deliver the next era of sustained growth. Noelle is leading the development of the strategic plan for that era. As previously announced, we are pleased to welcome back Brian Grass as our interim CFO. As many of you will remember, Brian has made significant contributions to the success of our company, not only during his seven years as CFO, but also throughout his 15-year tenure with Helen of Troy. His leadership, strategic thinking, and outstanding oversight of our finances were highly valued during his many years with the company. We welcome having his business insights and leadership back at Helen of Troy while we search for a permanent CFO. I also want to thank our outgoing CFO, Matt Osbert, for his leadership and contributions to the company during his time as CFO, as well as for his service as SVP of Finance. During Matt's seven-year tenure, he significantly strengthened our finance department into an even more capable global shared services team that will continue supporting the company moving forward. Turning now to our business results, we reported better fourth quarter performance than we expected in what has been one of the most unpredictable and challenging years in memory. Our key initiatives to improve cash flow and further strengthen our balance sheet are paying off. During the quarter, we expanded operating margin, reduced inventory to now below fiscal 21 levels, and accelerated our debt pay down. With fiscal 23 marking the fourth year of phase two, I believe it is helpful to give some long-term perspective. Our core net sales grew at a 9.1% KGAR since the phase two starting point in fiscal 19, well ahead of the target set. Core adjusted EPS grew at a 6.8% KGAR during the same period, despite the many challenges to profitability within our industry and in the broader macro environment. In fiscal 23, we largely completed our new 2 million square foot state of the art distribution facility in Tennessee. It is now open and has begun shipping to customers. Because of its size, its expected efficiency, and its substantial new capabilities, it provides an opportunity to reduce other parts of our distribution center footprint while still providing ample capacity for organic revenue growth and acquisition. Its completion will also allow us to return to a more normalized level of capital expenditure in fiscal 24, which we expect will further accelerate our free cash flow and our debt pay down. Turning now to Project Pegasus, we acted quickly and well beyond the belt tightening exercise. We did this to improve efficiency and address the impacts from the major macro trends of inflation, higher interest rates, and historic levels of retailer inventory rebalancing that challenged fiscal 23. Pegasus is on track to deliver its savings objectives. Beyond the cost savings from Pegasus, we see the new organizational structure and capabilities we announced in our January call as strategic benefits that will serve as an accelerator to top and bottom line growth. I would now like to turn the conversation over to Noelle.