Helen of Troy Limited

Helen of Troy Limited Third Quarter 2025 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, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Sabrina McKee, Senior Vice President of Business Development and Investor Relations. Thank you. You may begin.

Thank you, operator. Good morning, everyone. Happy New Year and welcome to Helen of Troy's third quarter fiscal 2025 earnings conference call. The agenda for the call this morning is as follows. I will begin with a brief discussion of forward-looking statements. Ms. Noëlle Geoffroy, the company's CEO, will comment on business performance and then provide some perspective on current trends. Then Mr. Brian Grass, the company's CFO, will review the financials in more detail and discuss our outlook. Following this, we will open up the call for Q&A. 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 similar words 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 cautions listeners not to place undue reliance on forward looking statements or non-GAAP information. Before I turn the call over to Ms. Geoffroy, I would like to inform all interested parties that a copy of today's earnings release and related investment deck has been posted to the company's website at www.HelenofTroy.com and can be found by navigating to the investor relations section of the site or by scrolling to the bottom of the homepage. The earnings release contains tables that reconcile non-GAAP financial measures to their corresponding GAAP-based measures. I will now turn the conference call over to Ms. Geoffroy. Thank you, Sabrina.

Happy New Year, everyone, and thank you for joining us today. We are pleased with our third quarter results that are within the outlook range we provided in October, despite continued cautious consumer spending on discretionary purchases and a weak cough, cold, and flu season globally. We are also pleased that our Tennessee distribution facility is running as designed, handling the volume of our heaviest quarter well. We continue to anticipate we will achieve our forecasted labor efficiencies by fiscal year end. We also made further progress during the quarter on our fiscal 25 efforts to reset and revitalize our brands with improved results, particularly in our home and outdoor portfolio. Project Pegasus remains on track with lower year-over-year product and commodity costs, having a positive impact on our gross profit margin and providing critical fuel for reinvestment in our brands and business. We also see continued progress on our long-term strategic initiatives. As you may recall, one of those strategic priorities was the formation of the North American Regional Market Organization, or NARMO, which in addition to our international RMO, is intended to make our brands more available where the shopper shops through incremental distribution gains. During the quarter, we continue to benefit from the meaningful net distribution gains won in the first half of fiscal 25 and further expanded distribution in the third quarter. Fiscal year to date, we have grown our US weighted distribution by 11% year over year. We have also gained a meaningful distribution internationally through a combination of new channels and new distributor partnerships. Another strategic initiative we have made progress on is use of data and analytics across all facets of our business. For example, we continue to use our marketing mix modeling data to prioritize investment opportunities across our brand portfolio, and also to select the marketing tactics where we see the best ROI potential. These efforts contributed to market share growth in multiple categories, with seven of our key categories growing or maintaining share this fiscal year through November in our U.S. measured channels and improved POS and share across multiple must-win markets internationally. Another important long-term strategic initiative is to refine and shape our portfolio with a focus on maximizing profitable growth. Subsequent to the end of the third quarter, we announced the closing of our acquisition of Olive & June. We are very excited to add Olive & June to our portfolio of leading brands and to welcome its passionate associates and visionary leadership team to the Helen of Troy family. Olive & June is an excellent fit with our goal of continuing Better Together M&A both strategically and financially. The brand complements our existing beauty portfolio and broadens us beyond the hair category adding a high-growth and high-margin consumables business that is immediately accretive to Helen of Troy. Olive & June's innovative-driven performance, highly relevant vision of democratizing nail care for everyone, award-winning products, and unique consumer engagement model are impressive and inspiring. Most recently, they were awarded Beauty Inc.' 's 2024 Breakthrough Beauty Brand in Mass, and they introduced a new gel polish platform in the third quarter that is outperforming expectations. As we mentioned previously, the Olive & June management team and associates will continue to drive both the strategy and operation of the business, working with the support of Helen & Troy's leadership to fully realize the brand's potential. We see significant growth potential in Olive & June as the team continues to build on the brand's strengths in consumer obsession and breakthrough commercial and product innovation in addition to leveraging Helen of Troy capabilities to help expand availability with increased distribution. We will continue to consistently evaluate our brand portfolio and remain disciplined in our approach to shaping it through both acquisition and potential divestiture to position the company for long-term success and growth. With acquisitions, we will continue to look for brands that have strong global growth potential, are financially accretive, and meet our Better Together criteria. Now let's turn to third quarter performance across our portfolio. Home and outdoor performed very well with growth in all three brands. In wellness, Ron and Vic were main leaders in their respective categories, even as those categories have been impacted by a week's cough, cold, and flu season. In beauty, we know there is more work to be done, but we did make further progress with focused actions to improve the fundamentals of the beauty business and its brands. International was again a highlight of the quarter, with sales growth of 7.5%, primarily driven by strength in home and outdoor. Starting with home and outdoor. For OXO, growth was driven by distribution gains and continued shelf productivity at Walmart, as well as higher international sales driven by growth in EMEA and LaFam. In October, OXO expansion at Walmart continued across kitchen and organization. notably with the introduction of our pot food storage line in over 2,000 Walmart stores. In November, OXO Top began an approximately 350 store test at Walmart. It's early days, but we are seeing positive momentum and are excited at this expansion opportunity for our well-regarded top line. OXO continued strong Walmart sales momentum into the holidays with significant sales growth versus the same period a year ago, driven by continued brand momentum, and the expanded distribution. OXO also gained additional distribution in the grocery channel. In the U.S., OXO continues to grow its leading market share fiscal year to date in its key categories, including kitchen utensils, where the category has normalized post-COVID and post-retailer shifts from specialty to mass, and dry food storage, where the category has been hindered by consumers' cautious spending. As mentioned last quarter, we recently launched our Oxford Brew Rapid Brewer coffee maker, building on the strength of our coffee line and offering portable options for great tasting hot coffee or cold brew concentrate in less than five minutes. The Rapid Brewer is performing very well with strong POS and was recently the number one new release in coffee machines on Amazon during the important Thanksgiving shopping week. We received exciting earned social media coverage as award-winning and highly respected coffee influencer and barista, Morgan Eckroth, posted a favorable and informative video review of the OXO Brew Rapid Brewer on their YouTube channel, amassing strong engagement. OXO also continues to serve the consumer in trend-bright ways with the introduction of ceramic-coated metal bakeware in November, just ahead of Thanksgiving. Turning to Hydroflask, We are pleased with the brand's positive momentum during the quarter, reflecting our focus on revitalizing the brand through innovation, distribution, and marketing. Growth in the quarter was driven by initial distribution gains at Target and a new essential hydration tumbler and bottle set offering at Costco. International sales were also strong, fueled by distribution expansion in EMEA, APAC, and LATAM, as we continue to leverage opportunities to draft both Osprey and OXO strength and create stronger distributor partnerships. Hydroclass e-commerce over-delivered driven by stronger than forecasted POS that lifted post Labor Day replenishment and stronger than forecasted performance on Prime Day with Hydroclass achieving the number one bestseller ranking within water bottles during the event. Hydroclass continues to win additional shelf space with more permanent placement in both the housewares and sporting goods sections at Target early in the fourth quarter is extending its presence in canada the brand also continues to drive engagement through relevant social media content highlighting its popular seasonal offerings for the holidays such as festive colorways gift sets and personalization options and its sponsorship of the charlie xcx sweat tour we also took the opportunity to remind our consumers of hydroclass long-standing commitments to provide them with top-quality products supported by, for example, the rigorous testing of our three leak-proof lids, the Flex Slip Lids, the Flex Straw Caps, and the Chug Caps that fit across our various bottles and tumblers. Osprey continues its momentum in everyday packs. The Daylight Fall 2024 Travel Launch has been very successful, helping drive a double-digit sales increase for the Daylight line. The Daylight Expandable Travel Pack has been a top online seller since launch and is receiving strong Amazon reviews. The brand also did well internationally with growth across all regions. We were honored that Osprey was included in Fast Company's list of Brands That Matter 2024 for the brand's commitment to sustainability through its use of recycled content in the main body fabric of 98% of its textile products, connecting people of all sizes with the outdoors with its extended fit collection, and for the brand's support of local communities. During the quarter, we also successfully integrated Osprey into our ERP system and our distribution network in the U.S. and Europe. I am pleased to share that we went live with this integration with minimal issues and have been successfully shipping our Osprey B2B and direct-to-consumer business from these facilities. This is an example of our focus on elevating our operational discipline. I am pleased with the team's strong planning and execution of this important integration. Now turning to beauty and wellness. For beauty, many of the key trends we spoke about last quarter continued in the third quarter with POS softness across our portfolio. Looking at the categories, overall growth for both hair appliances and hair liquids is moderating. In hair appliances, we continue to see a bifurcation with demand stronger for high-end appliances at price points above $100. Despite category softness in the below 100 price point appliances, Revlon gained momentum at mass and online, reflecting our value reframing and strong activations for holiday. The Revlon holiday palette in Walmart from early October through December featured the volumizer and root booster and drove significant year-on-year growth. The Revlon volumizer remains the number one selling item in units within the hair appliance category. Drybar launched three new holiday kits and a new triple shot interchangeable blow dryer brush, which continues to climb in sales and popularity of Amazon and Sephora as one of the brand's top tool SKUs. Looking forward, we believe we have some promising innovation on the appliance side to help bring some news and momentum back to this brand. CurlSmith is benefiting from our incremental growth investments across both innovation and marketing. At the beginning of the quarter, we launched Shake and Shine, a revolutionary curl refreshing mist that is ideal for extending your wash day look. It has quickly become one of CurlSmith's top-selling products. Our data-driven marketing insight tells us that the awareness campaigns we ran ahead of Black Friday had their intended impact. ETC was up significantly, and we saw the biggest lift in new consumers to the brand that we have seen in the last year. Curlsmith's consumer retention is a strength driven by product efficacy and instructional content. We are excited to see our increased focus on top of funnel marketing bearing fruit to increase brand awareness. Turning to our wellness business. As discussed last quarter, we gained new or expanded distribution on Braun thermometers at CVS, Costco, and Walmart, which are all contributing to positive POS trends for the brands. Offsetting this has been a weak, hot, cold, and flu season. Data indicates that through November, U.S. illness rates are down below the slow start we saw same time last year and at the lowest levels in the past eight years, excluding the COVID anomaly year of 2020 to 2021. Illness rates are similarly low in Europe and APAC. Subsequent to quarter end, dated through December 21st, shows illness rates have remained below the prior year and well below historic averages. While this is contributing to overall softness in the humidification and thermometry categories, Vicks and Braun have maintained their leading market shares. Vicks remains by far the number one brand in RX humidification, and Braun and Vicks remain the number one and number two brands, respectively, in the thermometry category. In water filtration, Pure continues to grow share with strong POS, and is gaining share in pitcher systems as the brand continues to highlight the relevant value reframing message that pure can save over $75 per month versus bottled water. The brand team also quickly put activation in market to leverage the renewed focus on cleaner drinking water, highlighted by the government's directives for local municipalities to identify and replace lead pipes over the coming decades. As the number one selling lead reducing filter brand, Pure launched an initiative to educate consumers to help them access clean drinking water. The campaign included educational resources available on the Pure website and a $25,000 donation to the Water Quality Research Foundation to support education and access to water testing kits for schools in need nationwide. These are great examples of leveraging our leading products with relevant and timely commercial activation. In summary, we remain focused on executing our strategic initiatives, while we continue to navigate the challenging and evolving consumer environment. Since we last reported earnings, three large retailers have filed for bankruptcy, including the Container Store, which is a meaningful customer for Okso. We also continue to see the widely reported bifurcation in spending between higher income and lower income households. while holiday spending overall is up year-over-year, is driven by higher-income consumers purchasing higher-priced items, while lower-income consumers continue to struggle prioritizing necessities over discretionary goods. We are flexing our portfolio and go-to-market execution to meet our consumers where they are with relevant product assortment and brand messaging. As we discussed, we are on a journey to reset and revitalize our brands. Despite some headwinds in the third quarter from the macro factors I just mentioned, we continue to make progress on our initiative, and the data tells us our investments are bearing fruit. We believe we are building a stronger, more collaborative, data-driven, and disciplined Helen of Troy that is better positioned to maximize the potential of our brands globally. Lastly, before I turn it over to Brian, I want to give thanks to everyone at Helen of Troy for being part of why we have earned two important recognitions including a significant jump in ranking to number 16 in the 2024 Healthiest 100 Workplaces in America, which recognizes people-first organizations that prioritize the well-being of their associate population. And for the third year in a row, recognition by Newsweek as one of America's most responsible companies 2025. Now I will turn it over to Brian.