Helen of Troy Limited

Greetings. Welcome to Helen of Troy second quarter 2024 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 Development. Thank you. You may begin.

thank you operator good morning everyone and welcome to helen detroit's second quarter fiscal 2024 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 and miss noel jovois the company's coo will comment on financial performance of the quarter and current trends then mr brian grass the company's cfo will review the financials in more detail and our financial outlook for fiscal 2024. Following this, we will take 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 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 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 press releases tab. I will now turn the conference call over to Mr. Mendenberg.

Thank you, Jack. Good morning, everyone, and thank you for joining us. Starting with our second quarter results, today we reported net sales and adjusted earnings per share that came in at the high end of our expectations. I'm pleased with the consistency of our results as we work toward returning to growth. I continue to be impressed with how well our organization is executing the ambitious set of initiatives we announced at the beginning of fiscal 24. This includes delivering our revenue expectations on the majority of our leadership brands and strong performance in international, as well as advancing a wide range of efficiency improvement projects. During the quarter, we made further progress on gross margin improvement and cash flow generation. We significantly expanded gross margins as we realized the benefits of lower inbound freight costs and skew rationalization. We also generated positive free cash flow as we continue to diligently manage our inventory and deployed a portion of our cash to repurchase approximately $50 million of our shares. For perspective, our initiative to streamline inventory over the past several quarters has resulted in a reduction of over $200 million compared to year-ago levels. The progress on free cash flow has also been significant, delivering a $325 million improvement in the first half of this fiscal year versus the first half of fiscal 23. Our second quarter results not only demonstrate strong execution across our entire organization, they also demonstrate resiliency as we manage through the continued challenging macro consumer environment in which consumers are continuing to shift spending away from discretionary products and more towards discretionary experiences, such as travel and entertainment. That shift in consumer spending patterns has been exacerbated by persistent inflation that forces consumers to make tough choices on all types of spending. Subsequent to the end of the second quarter, we closed on the sale of our office and 400,000 square foot distribution facility in El Paso, Texas, as part of our previously announced initiative to improve the efficiency of our assets. We intend to move to a new facility in El Paso to house our US headquarters, which we expect will be a long-term rental property. With El Paso being our largest shared service hub, we expect it to continue to play an ongoing important role for the company and community. We strongly value the work and passion of our dedicated associates in El Paso and are proud of our 55-year legacy in the area. In conjunction with the sale of the El Paso facility, we are also making some organizational moves as part of our ongoing efforts to operate more efficiently. Noel and Brian will provide more detail on these actions during their remarks. Turning to our outlook, we are maintaining our full-year expectations, which include returning to net sales and adjusted earnings per share growth in the fourth quarter of this fiscal year, and significant improvements to our gross margin, cash flow, and net leverage ratio. Our outlook includes our expectation of a continued slower economy and pressure on consumer spending levels and patterns, especially for some discretionary categories. During the quarter, we also made significant progress on planning for the future. This includes further progress executing Pegasus, finalizing our next strategic plan, and continuing a smooth transition to Noel as we prepare for her to become CEO in March. I am very pleased by the performance of our team on the Pegasus restructuring workstreams. Pegasus remains nicely on track as we continue executing and delivering its strategic and financial goals. The work of the Pegasus teams reiterates the strength of Helen Troy's people and culture as we deliver the outcomes needed to help manage through the current challenging macro environments. and we believe Pegasus Savings will provide significant additional fuel to fund our strategic investments. During our October 17th Investor Day, we will discuss our next strategic plan in detail, which will guide the company's actions during the next era. It is designed to deliver sustainable, profitable growth, create value for our shareholders, and is grounded on our timeless purpose, vision, and values. Before I turn the call over to Noel, I would like to comment on the outcome of our CFO search. Today we announced that Brian Grass, who returned to Helen of Troy as interim CFO in April, has reached an agreement with the company to remain in the CFO position on an ongoing basis. Noelle made a great selection, and I believe she and Brian will make a great team as the company embarks on its next chapter following my retirement. I will now turn the conversation over to Noelle.