Helen of Troy Limited

Greetings. Welcome to Helena Troy Limited first quarter 2026 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 Anne Rakunas, Director of Investor Relations. Thank you. You may begin.

Thank you, operator. Good morning, everyone. Welcome to Helen of Troy's first quarter fiscal 26 earnings conference call. Before I review our agenda with you, I'd like to welcome back Jack Jansen, our former SVP of Investor Relations and Business Development. He's temporarily rejoined the company while we conduct a search for a more permanent replacement for this role. The agenda for the call this morning is as follows. I will begin with a brief discussion, a forward-looking statement. Mr. Brian Grass, the company's interim CEO, will provide his thoughts on the company's current operations and key priorities for Fiscal 26. Tracy Shireman, our interim CFO, will then provide an update on our tariff mitigation strategies, give an overview of our financial performance in the first quarter, and provide commentary on our expectations the second quarter of Fiscal 26. Following our prepared remarks, 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 anticipate, 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 companies. The company cautions listeners not to place undue reliance on forward-looking statements or non-GAAP information. Before I turn the call over to Mr. Grass, I would like to inform all interested parties that the copy of today's earnings release and investor relations presentation has been posted to our website at HelenofTroy.com. It can be found on 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 Mr. Grass.

Good morning, everyone, and thank you for joining us. I want to start by welcoming Jack Jansen back to the team. For those that may not know, before his retirement in 2024, Jack had been with the company for almost 25 years, with over 10 years in investor relations and business development. It's great to have him filling in as we transition to a new leader in this role. I also want to welcome Tracy back to the company. I'm grateful for our partnership as we navigate CEO change, tariffs, and an uncertain macro environment. Leadership transitions bring fresh perspective, opportunity, and urgency. It's been just over two months since Tracy and I stepped into our interim roles. We feel fortunate to step into these roles with a deep understanding of our business, but we intentionally spent much of the last 60 days listening closely to our key stakeholders, especially our associates. The message we heard was that our people are hungry to win. Our associates care deeply about our brands, our purpose, and each other. Through our conversations, we heard enthusiastic feedback and candid ideas on where we can do better. There's a clear sense of urgency and readiness to drive the company forward. What also became clear is that to win in today's environment, we must get back to fundamentals and move with greater speed. Candidly, we lost some of that along the way. We became too matrixed, too slow, and at times, disconnected from each other and the marketplace. We made our company too complicated and lost focus on what made our businesses great. I own that as a leader. Now time to simplify, refocus, and accelerate. With all that in mind, we are focusing on five key priorities to rebuild our platform for profitable growth. One, restoring confidence within the organization in meeting our external commitments to key stakeholders. We're strengthening connections with consumers, retail partners, investors, and associates, and are focused on rebuilding the adaptability needed to deliver on our commitments in a dynamic environment. Two, improving our go-to-market effectiveness and simplifying how we operate. We're taking deliberate steps to further reduce costs and simplify our business. That means making tough choices, rationalizing and sharpening our spend, and enabling greater accountability and ownership. As we drive efficiencies, we're forming a leaner, more agile organization that is much better connected commercially and can better capitalize on incremental opportunities. Three, refocusing on innovation for more product-driven growth while optimizing our marketing investment. We intend to leverage consumer insights to reconnect with the consumer and our markets, and allocate more investment to build a deeper pipeline of breakthrough innovation that is new to the market and solves real consumer pain points. The Drybar all-inclusive styler we just soft-launched is a good example of this kind of innovation. We will also seek to capture shorter-term opportunities with new product features and enhancements, form factors, usage occasions, collaborations, kits and bundles, colors, and finishes. In addition, we will work to accelerate time to market for innovation already in development. Finally, we're sharpening our marketing investment to make it punch above its weight by focusing on the highest returns, channels, and tactics, driving more earned media, optimizing our paid funnel mix, producing assets more cost-effectively, and continually refining based on our measured performance. Four. Focusing on the fundamentals and fully leveraging the unique strengths of our brands. Focusing on the fundamentals means doing fewer things and doing those things better, returning to core strengths and executing with excellence. We created unnecessary sprawl and became scattered in terms of priorities. We also became a little too homogenized across our brands and lost some of what made our brands great. Going forward, we'll put the brands first and unlock the power that comes from their unique strengths. Five, reinvigorating our culture with resilience and an owner's mindset. We've lost some of our cultural strength along the way, which we are making a concerted effort to reinvigorate. We're enabling our teams to be ownership-driven, to move forward quickly, and deliver with purpose. That mindset is a force multiplier for performance and a critical driver of our future success. We know this journey won't be a straight line. The macro environment remains uncertain with geopolitical friction, economic uncertainty, shifting consumer behavior, and global trade disruption. But I'm confident that we are building a stronger, more resilient Helena Troy, one that is better prepared to navigate change and capitalize on opportunity. I intend to reinvigorate a renewed culture focusing on performance, execution, and consistent long-term value-creating results. Moving on to the quarter, our Q1 results were well below our expectations. Tariff-related disruption on our shipments was greater than we originally expected in April. There are three tariff-related impacts making up approximately eight percentage points of the 10.8% consolidated revenue decline. One, cancellation of direct import orders from China in response to higher tariffs. Two, tariff-related pull forward of orders into the fourth quarter of fiscal 25 leading to elevated inventory and lower replenishment in the first quarter of fiscal 26, which we expect to continue into the second quarter as demand continues to soften. And three, China softness driven by a shift from cross-border e-commerce to localized distribution models and increased competition from domestic sellers driven by government subsidies. In addition to the tariff-related impacts, We also saw weeks of supply adjustment at certain key retailers as shifting consumer demand curves are being reflected in retailers' inventory management practices. Finally, we're seeing clear evidence of the consumer trading down with average price compression of 3% to 4% in our U.S. business, which impacted first quarter revenue and profitability. You may have seen other companies recently calling out trade down behavior, including the dollar stores. which are a beneficiary of this trend. Tracy will take you through second quarter revenue in more detail, and you can also refer to the investor presentation on our website for an illustration of tariff related and other revenue impacts by segment and in total. Despite the headwinds, we are encouraged by underlying improvements we are seeing in our business. Highlights include U.S. point of sale unit growth in eight out of our 11 key brands in the first quarter. Point-of-sale dollar growth in U.S. mass of 4.4%. Strong category growth in key categories such as prestige hair liquids, air purifiers, and thermometry. BTC revenue growth of 9% year-over-year. Osprey revenue growth of 3.7% and point-of-sale growth of 3.8%. driven in part by the success of our expansion into categories outside of technical PACs, Pearl Smith revenue growth of 17%, followed in June revenue and profitability that continues to exceed expectations, and strong free cash flow of $45 million compared to $16 million in the same period last year. We believe these are indicative examples of improving fundamentals in the company, but we acknowledge that we need to deliver this kind of strength much more consistently across the portfolio. Turning to our business segments, the decrease in home and outdoor net sales was primarily driven by tariff-related impacts, which we believe are largely transitory over time, but are expected to persist into the second quarter. Turning to OXO, brand fundamentals remain strong as OXO gained share and extended its leadership and kitchen utensils in the quarter. Our twist and stack food storage line, launched in January, has been highly praised by consumers for quality, versatility, and thoughtful design. Hydro Flask remains one of the category's most loved brands, as consumers continue to shift from tumblers back toward traditional bottles, where Hydro Flask has been historically strong. On the innovation front, the Micro Hydro A 6.7-ounce insulated bottle, soft-launched via DTC and Whole Foods, has been an early winner, with one of our brick-and-mortar buyers recently saying, I love seeing customers come up to the displays completely smitten with the product on site. Consumers are responding enthusiastically to its functional but fashionable size, so much so we continue to chase demand on our DTC platform. More to come as we lean further into this initial success. Hydroflask's international business also grew, driven by expanded distribution in the Asia-Pacific region and Canada. As mentioned, Osprey posted nice growth, benefiting from expanded distribution, category stabilization, and robust DTC performance. While the broader U.S. technical pack market remains challenged, Osprey continues to lead, holding the number one market share, three times the size of the next national brand. Osprey again gained share in the kit carrier pack category and also received two major accolades this quarter. The Scarab 18 was named best hydration pack for hiking, and the Atmos AG50 won best multi-day hiking pack in the Men's Journal 2025 Outdoor Awards. Turning now to our beauty and wellness business, overall, the segment sales decline was driven primarily by similar direct import cancellations tariff-related pull forward by retailers in the fourth quarter of last year, and softer point of sale internationally, driven in part by cascading impacts of trade policy in the China market. In beauty, Revlon is gaining share in the below $100 category, with its value positioning resonating strongly in the current environment. In the above $100 category, we're excited about the initial soft launch success of the Drybar All-Inclusive Styler, which is an 8-in-1 multi-styler that provides more functionality and styling options than the competition, but is more affordably priced. The all-inclusive has gained strong traction with influencers and online. We are now rolling into an exclusive brick-and-mortar hard launch at Ulta, which you will begin to see in store at the end of July. As mentioned, CurlSmith grew in the quarter, driven by new liquid innovations, including a fragrance-free line a detox shampoo, and a multi-benefit curl shield heat-protectant cream. CurlSmith also launched an innovative new tool, the Defrizion Curl Reviving Wand, designed for enhanced styling to refresh, enhance, and define curls with less heat. It comes with interchangeable barrels to match varying consumer curl patterns and has been well-received by consumers and retailers. Olive and June continued its momentum, growing much faster than the overall nail category at its brick and mortar customers, and recently launching on Amazon at the end of the first quarter. The brand continues to distinguish itself within the industry. For the second year in a row, Olive and June has been named to Fast Company's Most Innovative Companies, gaining recognition for its innovative gel polish system that was launched last October and gives consumers the ability to produce salon-quality nails at home. This coveted honor is the definitive recognition of organizations not just keeping up, but setting the pace for transforming industries and shaping society. In wellness, our business was primarily impacted by lower international sales, largely driven by China, where geopolitical trade tensions and government subsidies are pushing the Chinese consumer toward domestic goods. We also saw a week close to the illness season in the Asia-Pacific region. A highlight of the quarter was the launch of the Pure Slim line at Walmart and select grocery stores at the end of May. We expect additional distribution to roll out over the summer. The Pure Slim pitcher is an 8-cup pitcher system available in multiple colors, large enough to quench a sizable thirst, yet compact enough to fit in a mini-fridge. Domestically, Braun benefited from both category growth and market share gains across brick and mortar and online channels fiscal year to date. This was strengthened by new distribution in Walmart and CDS, as well as strong performance on Amazon. During the quarter, we also secured new Braun distribution for blood pressure monitors at Walmart. Additionally, our new Vicks VapoSteam Lavender scent launched on Amazon and will hit shelves at Walmart and other select retailers later this summer, just in time for the upcoming cough, cold, and flu season. When used with a humidifier or vaporizer, Vicks VapoSteam Lavender releases a lavender-scented medicated mist that helps calm the impulse to cough, promoting a restful night's sleep. Moving on to our outlook. We are providing an outlook for the second quarter of fiscal 26, but not the full year, given the uncertainty related to still evolving tariffs and their potential impact on both revenue and cost. As mentioned, we expect tariff-related disruption on our revenue to persist into the second quarter. We believe the disruption is largely transitory, but will require more certainty with respect to global trade policy in order to stabilize. As we saw from the U.S. administration's trade announcements on Monday, there is still a lot of uncertainty that will need to play out. We also believe that the inflationary impacts from higher tariffs have not yet been fully realized by the consumer, which could create further pressure on our results in the second half of the year. We are providing some information on our investor presentation to give some directional perspective on puts and takes for the first and second halves of the year. In the meantime, we're focused on improving our fundamentals, adapting to a dynamic environment, controlling the things we can control, and delivering on our commitments. We look forward to updating you on the progress of our five key initiatives to rebuild our platform for profitable growth. With that, I'll pass the call to Tracy to provide more detail on our financial results and outlook for the second quarter.