Helen of Troy Limited

conference call. Before I review our agenda with you, I'd like to welcome our new Chief Executive Officer, Scott Ezell, who joined the company last month. The agenda for the call this morning is as follows. I will begin with a brief discussion of forward-looking statements. Scott will then share some of his initial thoughts and areas of focus. And Brian Grouse will provide a high-level discussion of the quarter and our progress on key initiatives. Tracy Shireman, our Assistant CFO, We'll then provide an overview of our financial performance in the second quarter and provide commentary on our expectations for the full year 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 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 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 Scott, I would like to inform all interested parties that a copy of today's earnings release and related investor presentation has been posted to the company's website at HelenofTroy.com and can be found on the investor relations section of the site or by scrolling to the bottom of the home page. The earnings release contains tables that reconcile non-GAAP financial measures to their corresponding GAAP-based measures. and I will now turn the conference call over to Scott.

Thank you, Anne, and good morning, everyone, and thank you for joining today's call. It is a great honor to speak to you as the CEO of Helena Troy. Before I begin, I would like to thank both Brian and Tracy for their leadership these past few months. I am so pleased they've agreed to continue helping me lead this company as Chief Financial Officer and Assistant CFO. I've enjoyed the opportunity to become acquainted and collaborate closely with them since I've joined. Their company knowledge, industry insight, and enterprise leadership are immensely valuable, especially as we make a smooth transition to our future. As this is my first earnings call since joining the company last month, let me share a little bit about me and why I'm enthusiastic about the future of Helena Troy. I most recently served as corporate vice president and general manager of Nike North America, and I was a member of the Nike executive leadership team. Part of this role, I was the president and CEO of Converse Inc. for four years, where I led a turnaround, a turnaround built on placing the consumer at the center of the enterprise, investing in new product innovation and brand building, and powering our teams around the world to win in the marketplace. I look forward to getting to know many of you during the weeks and months ahead. But as you get to know me, you will discover first, I'm extremely curious. I'm always looking at how things work and looking around the corner for the next key consumer behavior and category shift. Second, I'm a relationship builder. I enjoy meeting people and getting to know people. It makes me a better leader. And finally, I'm incredibly competitive and I want to win. These three characteristics have been a fundamental part of my DNA, both professionally and personally. The reason I chose to join Helen and Troy is simple. I love trusted brands. I love thoughtful product solutions and working with teammates that are passionate about consumers and solving consumer problems. I'm excited about the opportunity in front of us to engineer a great comeback story. We have the ability to reverse Helena Troi's recent underperformance and restore this company's reputation for consistent growth by providing world-class innovation to our consumers. But let's be clear. I am clear-eyed about the challenges we're facing. I embrace the opportunity of the reverse course. Occasionally, companies need to go through a renewal, and at Helena Troy, that renewal has started. It's underway. Our focus is to invigorate the exceptional assets we have to leverage our leadership brands and talent within our organization to win in the marketplace and to win in the workplace. There are many areas for enhancement, but no quick fixes. I work with great optimism, urgency, and purpose. One of my leadership traits is to inspire my team to fear staying still. Execution is the job of management and we will be laser focused on executing fewer, more impactful initiatives with excellence. One of my indispensable learnings for executing well is the importance of culture. This is the secret sauce that binds and fuels the enterprise ambition and drives enduring value. I believe leadership influences culture by setting a vision and management must set the pace and speed towards a clear destination. We will reduce organizational complexity and bureaucracy that has handcuffed this organization. It takes too long to make decisions. I'm so grateful for Brian, Tracy, and other company leaders that have already started to install some of these cultural remedies. Together, we will continue to inspire right actions in our associates to accelerate the best decision making. I intend to point and direct resources to the most innovative ideas to incubate and take hold. We will take thoughtful and swift actions to simplify our business and drive transparency and accountability across the company. We will empower nimble and more concentrated teams that quicker and make decisions closer to the consumer in the marketplace. I imagine one of the big questions on your mind today is, tell me more about your long-term strategic plan. It is the right question to ask. It is just a bit soon for me to provide all the details, but let me share with you four of my initial thoughts. First, I want to re-energize this company and its brands and its people. Although we've slipped recently, the categories we compete in demonstrate genuine growth potential. Going forward, our plan is to focus our attention and investments in a disciplined manner to those brands and opportunities that have the most promise. Eleanor Troy is a firm foundation with the opportunity to get back to industry-leading margins and strong cash flow. We have the flexibility to invest in our future to create more competitive advantage and still deliver strong financial profile. Second, We will position our corporate structure to place the consumer at the center of everything we do. We will place resources and talent closer to the consumer in the marketplace. Our associates want to establish a closer connection with our marketplace and our consumers, which will enhance their engagement and create a distinct presence as we win in the marketplace. My early observation is we have talented people across this enterprise. They just want to win. With that in mind, nothing we will do is more important than developing our people and adding more top talent. At the end of the day, I place my bets on people, not on strategies. Third, I want to strengthen the broader portfolio for predictable volume and profit growth. In my experience, best brand innovations always win. It is especially important that we refocus our creative engine to amplify building best-in-class devices and complementary consumables. There's a solid foundation in place already. Our platform is valuable and durable. We have maintained leading market share positions in key categories. We've begun making necessary adjustments to our product roadmap so that we're positioned to make more best in class products while staying laser focused on execution and ensuring they're in the market on time. However, I want to underline that there is not a quick fix. Our goal is to continue to be the brand solution of choice for our consumers. and this will require us to become even better at design, engineering, and marketing while anticipating the needs of our consumers. Finally, I want to improve asset efficiency and maintain our shareholder-friendly policies. On the asset side, our emphasis will be on improving working capital efficiency and, more broadly, balance sheet productivity. On the capital side, we will use cash flow generation of our business to invest in our core business first, reduce our debt, and then search for accretive acquisitions in the future, and then consider return of capital to our shareholders. I plan to continue Helen LaTroy's practice of proactive investor outreach via investor meetings and attending relevant investor conferences. In summary, we earned our way into a difficult period, and clearly we need to behave our way back to a high-quality, sustainable growth. Over the next few months, we will be working on a long-term plan which will provide a roadmap for our growth ambition. We will operate like we are wary bifocals, with vigilance on the near term, but always maintaining a primary focus on maximizing sustainable long-term value for our stakeholders. I will not be satisfied until we place the company on a sustainable path to further increasing market share, growing revenue, and delivering consistent returns for our shareholders. If we do this, I believe we can regain the trust of our stakeholders. With that, I want to turn it over to Brian.

Good morning, everyone. Thanks for joining. I'd like to start by welcoming Scott to the company as our new CEO. I believe his experience, business philosophy, leadership style, and strategic vision are a perfect fit for us as we enter the next phase of our evolution. After only a little more than a month, our associates have been energized by his commitment, passion, growth mindset, and people-first approach. I'm confident his leadership will help us deliver stabilization and reliability in our shorter-term results while we continue to rebuild our platform for sustainable long-term growth. As Scott joined us after the end of the quarter, Tracy and I will take the lead on discussing our results and outlook for the remainder of the year. But I know Scott is eager to take questions regarding his experience, why he chose Helen of Troy, and what he sees after five weeks at the company. Turning to the second quarter, while we are not at all satisfied with our results, we believe we took a step in the right direction with net sales and adjusted EPS at or above the high end of our outlook ranges. Highlights include double digit revenue growth for Hot Tools, Kroll Smith, and Osprey. Growth in both point of sale dollars and units for Braun, Osprey, Olive & June, and OXO. Olive and June revenue and profitability that continues to exceed expectations, DTC revenue growth of 15% year over year, and positive free cash flow of $23 million fiscal year to date, despite a cash flow drag of approximately $34 million from higher tariff payments. Looking more broadly, during our last call in July, we identified five key priorities to rebuild our platform for profitable growth in shareholder value creation. One, restoring confidence with key stakeholders. Two, improving go-to-market and operating effectiveness. Three, refocusing on innovation for more product-driven growth. Four, focusing on the fundamentals and fully leveraging the unique strengths of our brands. And five, reinvigorating our culture with resilience and an owner's mindset. I'm pleased to share that we made meaningful progress across all five priorities since our last call. I'm most encouraged by the work we did to improve our go-to-market and operating effectiveness. We recognize that some of our past strategies and execution have fallen short, impacting our credibility with key stakeholders. We've made meaningful modifications to course correct our structure strategy execution and approach which we believe will improve the reliability of our operating results in the near term and lead the way towards growth and consistent shareholder value creation in the longer term as part of our effort to improve go-to-market effectiveness we realigned our commercial triangle of product sales and marketing within each division putting our brands at the center and rebuilt our organizational structure with single points of accountability under our segment leaders to deliver business results. We have seen immediate benefits in terms of alignment, communication, clarity, efficiency, speed, and ownership of results. We are also making progress toward our goal of sustained operational excellence across the enterprise. As examples, our distribution operations are now hitting service level targets and nearing peak efficiency levels, and we've made improvements to our direct-to-consumer platforms, digital assets, and overall consumer experience, which helped drive double-digit DTC growth for the first half of fiscal 26. While our second quarter results reflect the early impact of our focus on fundamentals, simplifying operations, sharpening our priorities, and increasing agility, They also highlight that we remain in a transition period with further improvement still needed. I thought it would be beneficial to give continued perspective on tariffs as the macro environment remains complex with tariffs continuing to influence our operations and impact our financial performance. As most are aware, in April of this year, the U.S. government implemented a broad set of tariffs aimed at restructuring trade relationships particularly with China. Since then, we have experienced significant increases in tariff rates, which have created immediate and ongoing revenue, earnings, cash flow, and balance sheet impacts. In response, we've taken a series of tariff mitigation, cost reduction, and cash flow preservation actions that we've outlined in previous calls and continue to build on. One, supplier diversification. We have actively worked to mitigate tariff risks by diversifying our sourcing and manufacturing footprint outside of China. Tracy will give you an update, and there is material in our investor presentation on this. Two, inventory management and SKU prioritization. We purchased targeted additional inventory in late fiscal 25 and early fiscal 26 ahead of potential tariffs. Subsequently, throughout April and May, we significantly reduced purchases of finished goods from China until tariff levels decreased to a more manageable level, limiting our overall exposure. Three, supplier cost reductions. In an effort to offset some portion of tariff increases, we have pursued cost reduction opportunities with our suppliers, which we have continued to stack up since Liberation Day. Four, customer price increases. We notified retail customers of targeted price increases with the original goal of having them in place near the end of the summer. Working collaboratively with our key retailers and in careful consideration of market and category dynamics, we have now implemented the majority of our planned price increases as of the end of September. However, there are some isolated price increases that are still pending and we are holding shipments in some instances as we work toward consistent adoption across our retail customer base. We expect a slight delay in implementation and the holding of shipments to compress our operating results in the second half of fiscal 26 as compared to our previous expectations, which has been factored into the outlook provided in our second quarter earnings release. And five, cost management. In response to tariffs and revenue declines over the past several quarters, we've implemented a series of measures to reduce overall cost, optimize working capital, improve balance sheet productivity, and preserve cash flow. While tariffs present ongoing headwinds, we believe our diversified sourcing strategy, extensive tariff mitigation, and proactive cost management positions us well to continue to adapt to the disruption and uncertainty that will continue to evolve. Our focus remains on balancing short-term adjustments with investments in innovation and growth, ensuring the business remains resilient and healthy as we take steps toward a return to growth and long-term value creation. Turning back to our second quarter results, I'll start with our beauty and wellness segment. Sales declined 4%, favorable to our outlook range of a decline of 11.3% to 6.1%. despite ongoing consumer pressures and continued revenue disruption from tariffs. Olive in June was a standout, delivering better than expected sales of 33.4 million. Segment organic sales declined as consumers remained cautious, tariffs weighed on direct import orders, retailers adjusted inventories, and our overall point of sale declined. Turning to international results for the segment, remaining retail inventory from last year's wheat, cough, cold, and flu season, coupled with the slow start to this year's season, led to lower replenishment in the second quarter. In China, government incentives favoring localized fulfillment are driving consumer and distributor purchases away from preferred global brands like Braun, which are not sourced domestically and are not price competitive without the subsidy. Taking a step back from the beauty and wellness financial results for the quarter, I'd like to highlight some underlying bright spots we see in the business. Curlsmith recently completed a brand refresh under the campaign, It's a Curl's World. The update simplifies curly hair care into a three-step routine, introduces fresh new packaging for easier navigation, and brings innovation with products like the Awestruck Definition Cream and Moisture Memory Release. These are designed to extend curl longevity, boost hydration, and provide customized solutions across moisture, strength, and frizz control. Shipments to retail partners, including Ulta, began in the second quarter. Olive and June continues to build momentum in DIY nail care. With innovative tools and products that deliver salon quality results, the brand is resonating with the broad customer base. Growth this quarter was fueled by replenishment demand, new product launches, and expanded distribution. Retail partners are also expanding assortment and in-store placement, giving Olive and June even more reach in the back half of the fiscal year. We are pleased that our beauty portfolio was recently recognized by the Allure Best of Beauty Awards, often called the Oscars of the beauty industry. They are a powerful endorsement and recognition of product excellence and innovation. This year, our brands earned five top honors. Curl Smith for Best Curl Enhancer, Drybar Hot Toddy for Best Heat Protector, Revlon One Step Volumizer Plus for Best Brush Dryer, Hot Tools for Best Static Curling Iron, and Olive & June Gel Mani for Best Breakthrough. These wins underscore the strength and diversity of our beauty brands and reflect the team's outstanding work to drive innovation and execution across our beauty business. In home and outdoor, second quarter results were consistent with our expectations. Net sales declined 13.7% as the domestic market remained under pressure from the impact of tariffs on direct import orders, cautious consumer spending, and lower replenishment from retail partners as they manage inventory levels with a cautious view of the consumer environment. This was partially offset by OXO distribution gains and continued strong performance in food storage, bath, and kitchen gadgets at retail. Internationally, segment sales grew, driven by Osprey. Turning to OXO, the brand's fundamentals remain strong. consumers are responding well to twist and stack food storage solutions for their durability and secure ceiling lids. Our rapid brewer is earning outstanding feedback for speed, versatility, and thoughtful design. And the new compact conical burr coffee grinder was recognized by Forbes as the best value pick in its category, praised for consistent grind quality and slim user-friendly design. Other recent launches continue to grow, including OXO ceramic bakeware and additions to our emerging OXO-TOT feeding line, further reinforcing OXO's reputation for solving everyday problems with high-quality, intuitive products. Hydroflask highlights include the new MicroHydro, which is proving to be highly fashionable and versatile, compact enough for everyday carry, yet functional across wellness, outdoor, and travel occasions. Early adoption has been strong, and we see opportunity to build this into a distinct franchise. Our new 24-ounce travel tumbler and travel bottle also drove nice growth during the quarter, reflecting continued demand for performance hydration and the brand's ability to continue to expand into adjacent sizes, shapes, form factors, and categories. Osprey posted strong growth in the quarter, led by technical and travel packs. In the U.S. technical pack market, Osprey remains the number one brand with share more than three times larger than the next competitor. Consumers are rewarding the brand's sustainability leadership, including our move to 100% recycled fabrics and elimination of PFAS-based durable water repellent across all textile products. Performance remains a differentiator as well. Our new Archeon series, featuring an abrasion-resistant, 100% recycled fabric, performed so strongly in testing that our machines could not wear it down. That level of quality is resonating with consumers. The limited edition Archeon Fujin backpack, created in collaboration with Keriology, sold out in just 24 hours. In addition, new transporter and daylight travel packs grew double digits, and our kit carriers gained share and grew point of sale. Despite near-term demand variability and ongoing retail inventory adjustments, OXO, Hydroflask, and Osprey continue to show positive consumer traction. We are prioritizing innovation, brand relevance, and sustainability, the core elements that will restore growth and deliver long-term value in home and outdoor. In closing, we are giving perspective on challenging external factors today. But let me be clear, it's up to us whether we grow or not. While we expect the environment to remain challenging, our North Star must be to keep the consumer at the center of everything we do. Consumers are seeking a better value proposition for their limited share of wallet. We can deliver that proposition across a strong portfolio of brands with innovative products that resonate with the consumer and exceed their expectations with differentiated features, thoughtful designs, and superior performance. When we support these efforts with the right brand building initiatives, flawless retail and operational execution, and a delightful end-to-end consumer experience, it should be a winning formula in any environment. Getting that formula right is up to us. Before turning the call over to Tracy, I want to acknowledge the dedication and professionalism of our associates. Their resilience and commitment are critical as we work through this period of new beginning. We're taking deliberate steps to strengthen our foundation, refine our strategies, improve our execution, and position Helena Troy for long-term success. We remain focused on delivering our commitments while we rebuild our platform to drive profitable growth and value creation for our shareholders. And now Tracy will review the financials in more detail and provide our financial outlook for the remainder of fiscal 26.