Helen of Troy Limited (HELE) posted impressive fourth-quarter fiscal 2024 results, wherein the top and bottom lines beat the Zacks Consensus Estimate and increased year over year. The company remains committed to prioritizing consumers by continuously delivering quality brands and products that are well-messaged and appropriately placed."Elevate for Growth" signifies a transformative strategy for the company, prioritizing innovative portfolio management, incremental investment in brands and capabilities, an ...

Helen of Troy (HELE) reported $489.2 million in revenue for the quarter ended February 2024, representing a year-over-year increase of 1%. EPS of $2.45 for the same period compares to $2.01 a year ago.The reported revenue compares to the Zacks Consensus Estimate of $477.88 million, representing a surprise of +2.37%. The company delivered an EPS surprise of +6.06%, with the consensus EPS estimate being $2.31.While investors scrutinize revenue and earnings changes year-over-year and how they compare with Wall ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 29, 2024 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-14669 HELEN OF TROY LIMITED (Exact name of registrant as specified in its charter) (State or other jurisdiction (I.R.S. Employer of incorporation or organizatio ...

Exhibit 99.1 Helen of Troy Limited Reports Solid Fourth Quarter Fiscal 2024 Results Consolidated Net Sales Growth of 1.0% GAAP Diluted EPS Growth of 19.3% to $1.79; Adjusted Diluted EPS Growth of 21.9% to $2.45 GAAP Operating Margin Expansion of 240 Basis Points Adjusted EBITDA Margin Expansion of 410 Basis Points; Growth of 28.4% to $94.3 million Initiates Fiscal 2025 Outlook: Consolidated Net Sales of $1.965-$2.025 Billion GAAP Diluted EPS of $6.68-$7.45; Adjusted Diluted EPS of $8.70-$9.20 Adjusted EBITD ...

Helen of Troy Limited (HELE) is likely to register a top-line decline when it reports fourth-quarter fiscal 2024 earnings on Apr 24. The Zacks Consensus Estimate for net sales is pegged at $477.9 million, suggesting a drop of 1.4% from the prior-year quarter’s reported figure. The consensus mark for fiscal 2024 net sales is pegged at almost $2 billion, suggesting a drop of 3.8% from the year-ago period’s reported figure.Nevertheless, the company’s bottom line is likely to increase year over year. The consen ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended November 30, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __ to __ Commission File Number: 001-14669 HELEN OF TROY LIMITED (Exact name of registrant as specified in its charter) (State or other j ...

Financial Data and Key Metrics Changes - Consolidated net sales decreased by 5.7% compared to a growth of 9.7% in the same period last year, with a decline of 3.4% on a two-year stack [87] - Net income was $27.4 million, or $1.14 per diluted share, while non-GAAP adjusted diluted EPS decreased by 23.3% to $1.74 per share [40] - Gross profit margin improved by 420 basis points to 46.7% compared to 42.5% in the same period last year [66] - Adjusted operating margin declined by 120 basis points to 12.7% [39] Business Line Data and Key Metrics Changes - Home & Outdoor adjusted operating margin decreased by 180 basis points to 17.7% [88] - Beauty and Wellness segment net sales declined by 10.4%, primarily due to SKU rationalization and softness in humidification, heaters, and fans [33] - Osprey brand achieved strong growth fueled by accelerated travel demand and improved inventory position [32] Market Data and Key Metrics Changes - International sales growth was driven by Braun and Osprey, with strong performance in the UK and Germany [63] - The company expects a decline in net sales of approximately 4% to 2% in the third quarter, with growth concentrated in the fourth quarter [91] Company Strategy and Development Direction - The company is focused on executing the Pegasus restructuring initiatives to improve efficiency and effectiveness [57] - Plans to geographically consolidate the U.S. Beauty business to enhance collaboration and innovation [57] - The upcoming Investor Day on October 17th will outline the next strategic plan and long-term targets [36] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to net sales and adjusted EPS growth in the fourth quarter despite a challenging macro environment [53] - The company anticipates cautious retail ordering patterns in the third quarter, with a more normalized ordering in the fourth quarter [41] - Management noted that consumer spending is shifting towards experiences rather than discretionary products due to inflation [52] Other Important Information - The company closed on the sale of its El Paso distribution facility for total proceeds of $51 million, with a gain of approximately $34 million expected to be recognized in the third quarter [89] - The company continues to expect capital asset expenditures of between $45 million and $50 million for fiscal 2024 [43] Q&A Session Summary Question: Can you elaborate on the change in Pegasus costs? - Management clarified that the reduction in restructuring charges is due to a revised assessment of a potential exit from one of the businesses, which is no longer expected to incur costs [96] Question: What progress has been made with the new North American RMO? - Management indicated that the new regional marketing organization has started to yield positive results, including increased shelf space and distribution gains [100] Question: How is the company addressing inventory destocking? - Management noted that inventory levels are generally low, and they expect Q4 ordering patterns to align more closely with the first half of the year [108]

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, detailing asset, income, and cash flow changes for the quarter and six months ended August 31, 2023 [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements) Total assets slightly decreased to **$2.90 million**, while net income declined, and operating cash flow significantly improved to **$157.7 million** for the six-month period Condensed Consolidated Balance Sheet Highlights (Unaudited) | (in thousands) | August 31, 2023 | February 28, 2023 | | :--- | :--- | :--- | | **Total current assets** | $888,692 | $892,041 | | **Total assets** | $2,901,660 | $2,913,715 | | **Total current liabilities** | $472,395 | $412,158 | | **Total liabilities** | $1,399,777 | $1,424,904 | | **Total stockholders' equity** | $1,501,883 | $1,488,811 | Condensed Consolidated Statements of Income (Unaudited) | (in thousands, except per share data) | Three Months Ended Aug 31, 2023 | Three Months Ended Aug 31, 2022 | Six Months Ended Aug 31, 2023 | Six Months Ended Aug 31, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Sales revenue, net** | $491,563 | $521,400 | $966,235 | $1,029,478 | | **Gross profit** | $229,653 | $221,446 | $445,284 | $432,617 | | **Operating income** | $46,845 | $46,946 | $87,486 | $80,885 | | **Net income** | $27,381 | $30,672 | $49,962 | $55,267 | | **Diluted EPS** | $1.14 | $1.28 | $2.07 | $2.29 | Condensed Consolidated Statements of Cash Flows (Unaudited) | (in thousands) | Six Months Ended Aug 31, 2023 | Six Months Ended Aug 31, 2022 | | :--- | :--- | :--- | | **Net cash provided (used) by operating activities** | $157,732 | $(75,452) | | **Net cash used by investing activities** | $(20,311) | $(258,922) | | **Net cash (used) provided by financing activities** | $(142,280) | $340,643 | [Note 1: Basis of Presentation and Corporate Overview](index=9&type=section&id=Note%201%20-%20Basis%20of%20Presentation%20and%20Related%20Information) This note outlines the corporate structure, detailing the consolidation of Health & Wellness and Beauty segments into a new 'Beauty & Wellness' reportable segment - Effective Q4 fiscal 2023, the company consolidated its Health & Wellness and Beauty segments into a single **'Beauty & Wellness'** reportable segment, now operating two segments: **Home & Outdoor** and **Beauty & Wellness**[17](index=17&type=chunk) [Note 8: Restructuring Plan (Project Pegasus)](index=15&type=section&id=Note%208%20-%20Restructuring%20Plan) This note details 'Project Pegasus,' a global restructuring plan targeting **$60-$65 million** in charges and **$75-$85 million** in annual pre-tax operating profit improvements - Project Pegasus now estimates lower total pre-tax restructuring charges of **$60-$65 million** (down from **$85-$95 million**), to be completed during fiscal 2025[54](index=54&type=chunk) - The plan targets annualized pre-tax operating profit improvements of **$75-$85 million**, expected to be substantially achieved by fiscal 2026, with savings realized approximately **60%** through reduced cost of goods sold and **40%** through lower SG&A[55](index=55&type=chunk) Restructuring Charges Incurred (Project Pegasus) | (in thousands) | Three Months Ended Aug 31, 2023 | Six Months Ended Aug 31, 2023 | Total Incurred Since Inception | | :--- | :--- | :--- | :--- | | **Total restructuring charges** | $3,617 | $10,972 | $38,334 | [Note 14: Segment Information](index=26&type=section&id=Note%2014%20-%20Segment%20Information) This note provides a financial breakdown by segment, detailing net sales and operating income for the Home & Outdoor and Beauty & Wellness segments Segment Performance for Three Months Ended August 31, 2023 | (in thousands) | Home & Outdoor | Beauty & Wellness | Total | | :--- | :--- | :--- | :--- | | **Sales revenue, net** | $239,977 | $251,586 | $491,563 | | **Operating income** | $36,099 | $10,746 | $46,845 | Segment Performance for Six Months Ended August 31, 2023 | (in thousands) | Home & Outdoor | Beauty & Wellness | Total | | :--- | :--- | :--- | :--- | | **Sales revenue, net** | $457,121 | $509,114 | $966,235 | | **Operating income** | $58,215 | $29,271 | $87,486 | [Management's Discussion and Analysis (MD&A)](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial results, noting a **5.7%** decrease in net sales, improved gross margin, and enhanced liquidity from operations [Overview and Significant Trends](index=30&type=section&id=Overview%20and%20Significant%20Trends) This section outlines ongoing transformation, macroeconomic impacts on consumer spending, growth in online sales, and the favorable resolution of patent litigation - The company's online channel sales grew approximately **17%** year-over-year for the quarter, comprising about **27%** of total consolidated net sales revenue[118](index=118&type=chunk) - On September 19, 2023, the ITC issued a Final Determination in the company's favor regarding the Brita patent litigation, terminating the investigation[113](index=113&type=chunk) - High inflation and interest rates negatively impacted consumer disposable income and spending, leading to reduced retail orders and adverse Q2 FY2024 results[114](index=114&type=chunk)[117](index=117&type=chunk) [Results of Operations](index=36&type=section&id=Results%20of%20Operations) This section analyzes financial performance, noting a **5.7%** decrease in consolidated net sales, a **4.2** percentage point gross margin expansion, and a nearly flat operating income Consolidated Results Summary - Q2 FY2024 vs Q2 FY2023 | (in thousands) | Q2 FY2024 | Q2 FY2023 | % Change | | :--- | :--- | :--- | :--- | | **Total sales revenue, net** | $491,563 | $521,400 | (5.7)% | | **Gross profit** | $229,653 | $221,446 | 3.7% | | **Operating income** | $46,845 | $46,946 | (0.2)% | | **Net income** | $27,381 | $30,672 | (10.7)% | - The **5.7%** decline in consolidated net sales was driven by a **6.0%** decrease from Organic business, primarily due to lower sales in Beauty & Wellness and Home & Outdoor categories[134](index=134&type=chunk)[138](index=138&type=chunk) - Consolidated gross profit margin increased by **4.2** percentage points to **46.7%**, primarily due to lower inbound freight costs and the absence of prior-year EPA compliance costs of **$7.1 million**[151](index=151&type=chunk)[153](index=153&type=chunk) - Consolidated SG&A ratio increased by **3.9** percentage points to **36.5%**, driven by higher compensation, marketing, and distribution expenses, and unfavorable sales leverage[154](index=154&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity strengthened significantly, with operating cash flow increasing to **$157.7 million** and capital expenditures decreasing to **$20.6 million** - Net cash provided by operating activities was **$157.7 million** for the six months ended August 31, 2023, a significant improvement from **$75.5 million** cash used in the prior year, driven by improved inventory and accounts receivable management[187](index=187&type=chunk)[188](index=188&type=chunk) - Capital and intangible asset expenditures decreased to **$20.6 million** for the first six months of fiscal 2024, compared to **$112.6 million** in the prior year, following the completion of a new distribution facility[189](index=189&type=chunk) - As of August 31, 2023, the company had an outstanding Credit Agreement principal balance of **$846.8 million** and **$629.2 million** available for borrowing[193](index=193&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company reports no material changes to its market risk disclosures from its most recent Form 10-K, with key risks actively managed - There have been no material changes in the company's quantitative and qualitative disclosures about market risk since the last Form 10-K filing[198](index=198&type=chunk) [Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of August 31, 2023, with no material changes to internal controls identified - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of August 31, 2023[201](index=201&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter[202](index=202&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings and Risk Factors](index=54&type=section&id=Item%201.%20Legal%20Proceedings%20%26%20Item%201A.%20Risk%20Factors) The company reports no material changes to legal proceedings or risk factors since its last Form 10-K, except for a favorably resolved patent litigation - There have been no material changes in legal proceedings or risk factors since the last Form 10-K, other than the favorably resolved patent litigation discussed in Note 9[203](index=203&type=chunk)[204](index=204&type=chunk) [Issuer Purchases of Equity Securities](index=55&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%2C%20Use%20of%20Proceeds%2C%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section details share repurchase activity, with **381,965** shares repurchased for **$50.1 million**, and **$349.1 million** remaining under authorization Share Repurchase Activity (June 1 - August 31, 2023) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | June 2023 | 477 | $97.01 | | July 2023 | 381,221 | $131.18 | | August 2023 | 267 | $125.86 | | **Total** | **381,965** | **$131.14** | - As of August 31, 2023, approximately **$349.1 million** remained available under the current stock repurchase authorization[206](index=206&type=chunk)[207](index=207&type=chunk)

Financial Data and Key Metrics Changes - Consolidated net sales decreased by 6.6%, better than the expected decline of 9% to 7% [68][76] - Core adjusted diluted earnings per share declined by 19.5% to $1.94, primarily due to higher interest expense and lower adjusted operating income [79] - Gross profit margin improved by 380 basis points to 45.4% compared to 41.6% in the same period last year [77] - GAAP operating margin increased to 8.6% from 6.7% year-over-year, while adjusted operating margin rose by 30 basis points to 13.9% [78] Business Line Data and Key Metrics Changes - Home & Outdoor adjusted operating margin decreased by 30 basis points to 15.8%, impacted by higher distribution and marketing expenses [102] - Beauty & Wellness segment saw an 80 basis points increase in adjusted operating margin, driven by SKU rationalization and lower inbound freight costs [79] - Osprey performed well, benefiting from improved inventory and new product introductions, while OXO saw strong sales in kitchen gadgets and dry food storage [49][51] Market Data and Key Metrics Changes - Retailer inventory rebalancing has largely normalized, with demand normalizing in some categories and settling at or above pre-COVID levels [36] - International sales growth was driven by Braun, Osprey, Hot Tools, and Curlsmith, with replenishment orders normalizing [99] - The air purifier category saw increased sales due to wildfire smoke, with a notable uptick in demand for air purification devices [73][143] Company Strategy and Development Direction - Project Pegasus aims to improve operating margins, cash flow, and organizational efficiency, with significant momentum and savings expected [37][41] - The company is focusing on nearshore sourcing to diversify geopolitical risk and enhance responsiveness [45] - Continued investment in marketing and consumer-centric innovation is planned to drive sustainable long-term growth [42] Management's Comments on Operating Environment and Future Outlook - The company maintains its expectations for net sales and adjusted earnings per share for the full fiscal year, despite anticipated consumer spending pressures [62][82] - Management acknowledges the impact of inflation, higher interest rates, and increasing household debt on discretionary purchases [62] - The company is optimistic about its diversified product portfolio and sufficient inventory to meet future demand when it strengthens [83] Other Important Information - The company generated $109.2 million of free cash flow, ahead of expectations, and reduced total debt by approximately $97.3 million [80][81] - Capital expenditures are expected to be between $45 million and $50 million for fiscal '24, including costs for a new distribution facility [88] - The company expects to maintain a net leverage ratio improvement to between 2 times and 1.85 times by the end of fiscal '24 [104] Q&A Session All Questions and Answers Question: What is the overall health of the Hydro Flask brand? - Management noted that promotional activity is normal and that they are encouraged by the early sales results from the new travel tumbler launch [114][115] Question: What has surprised you the most about Project Pegasus? - The organization’s embrace of the initiative and the analytical rigor applied to SKU rationalization have been positive surprises [116][118] Question: What are the dynamics impacting the 2Q outlook? - The outlook reflects a shift in sales due to timing of investment spending and expected growth investment spending in the second quarter [120][123]

PART I. FINANCIAL INFORMATION [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Helen of Troy reported Q1 FY24 net sales of $474.7 million, with increased operating income and strong cash flow from operations Condensed Consolidated Statements of Income (Unaudited) | (in thousands, except per share data) | Three Months Ended May 31, 2023 | Three Months Ended May 31, 2022 | | :--- | :--- | :--- | | **Sales revenue, net** | **$474,672** | **$508,078** | | Gross profit | $215,631 | $211,171 | | Operating income | $40,641 | $33,939 | | Net income | $22,581 | $24,595 | | **Diluted EPS** | **$0.94** | **$1.02** | Condensed Consolidated Balance Sheets (Unaudited) | (in thousands) | May 31, 2023 | February 28, 2023 | | :--- | :--- | :--- | | **Total assets, current** | **$856,057** | **$892,041** | | Goodwill | $1,066,730 | $1,066,479 | | **Total assets** | **$2,872,828** | **$2,913,715** | | Total liabilities, current | $440,791 | $412,158 | | Long-term debt, excluding current maturities | $830,922 | $928,348 | | **Total liabilities** | **$1,357,920** | **$1,424,904** | | **Total stockholders' equity** | **$1,514,908** | **$1,488,811** | Condensed Consolidated Statements of Cash Flows (Unaudited) | (in thousands) | Three Months Ended May 31, 2023 | Three Months Ended May 31, 2022 | | :--- | :--- | :--- | | **Net cash provided (used) by operating activities** | **$121,056** | **($38,428)** | | Net cash used by investing activities | ($11,631) | ($222,509) | | Net cash (used) provided by financing activities | ($99,629) | $276,810 | [Note 1 - Basis of Presentation and Related Information](index=9&type=section&id=Note%201%20-%20Basis%20of%20Presentation%20and%20Related%20Information) The company operates two segments, Home & Outdoor and Beauty & Wellness, following a Q4 FY23 restructuring - As of May 31, 2023, the company operates two reportable segments: **Home & Outdoor** and **Beauty & Wellness**[19](index=19&type=chunk) - The **Beauty & Wellness** segment was formed in Q4 fiscal 2023 by combining the previous Health & Wellness and Beauty operating segments as part of a global restructuring plan[19](index=19&type=chunk) [Note 3 - Acquisition of Curlsmith](index=11&type=section&id=Note%203%20-%20Acquisition%20of%20Curlsmith) The company acquired Curlsmith for $147.9 million in April 2022, recognizing $117.1 million in goodwill - Completed the acquisition of Recipe Products Ltd. (**Curlsmith**) on April 22, 2022[32](index=32&type=chunk) Curlsmith Acquisition Details | Metric | Value (in millions) | | :--- | :--- | | Total Purchase Consideration | $147.9 | | Goodwill Recognized | $117.1 | | Trade Names (20-year life) | $21.0 | | Customer Relationships (19.5-year life) | $12.0 | - From its acquisition date through May 31, 2022, Curlsmith contributed **$3.2 million** in net sales and **$0.4 million** in net income[36](index=36&type=chunk) [Note 7 - Restructuring Plan](index=14&type=section&id=Note%207%20-%20Restructuring%20Plan) The company's 'Project Pegasus' restructuring targets **$75-85 million** in annualized profit improvements by FY2026, with **$7.4 million** in Q1 FY24 charges - **Project Pegasus** targets annualized pre-tax operating profit improvements of approximately **$75 million to $85 million**, expected to be substantially achieved by the end of fiscal 2026[51](index=51&type=chunk) - Total one-time pre-tax restructuring charges are estimated to be between **$85 million and $95 million**[51](index=51&type=chunk) Project Pegasus Restructuring Charges (Q1 FY24) | (in thousands) | Amount | | :--- | :--- | | **Total restructuring charges** | **$7,355** | | Severance and employee related costs | $892 | | Professional fees | $5,626 | | **Total incurred since inception** | **$34,717** | [Note 8 - Commitments and Contingencies](index=16&type=section&id=Note%208%20-%20Commitments%20and%20Contingencies) The company faces ongoing patent litigation with Brita LP over PUR water filtration systems, with an ITC decision expected by September 2023 - **Brita LP** filed a patent infringement complaint against the company related to **PUR** gravity-fed water filtration systems[54](index=54&type=chunk) - The **ITC** issued an Initial Determination against the company, which is under review, with a final decision expected by **September 19, 2023**[54](index=54&type=chunk) EPA Compliance Costs | (in thousands) | Three Months Ended May 31, 2023 | Three Months Ended May 31, 2022 | | :--- | :--- | :--- | | Total EPA compliance costs | $0 | $11,644 | [Note 9 - Long-Term Debt](index=18&type=section&id=Note%209%20-%20Long-Term%20Debt) Total long-term debt decreased to **$837.2 million** as of May 31, 2023, with a weighted average interest rate of **6.8%** Long-Term Debt Summary | (in thousands) | May 31, 2023 | February 28, 2023 | | :--- | :--- | :--- | | Revolving loans | $594,000 | $690,000 | | Term loans | $245,312 | $246,875 | | **Total long-term debt** | **$837,157** | **$934,412** | - The weighted average interest rate on borrowings was **6.8%** as of May 31, 2023, up from **6.6%** as of February 28, 2023[61](index=61&type=chunk) - As of May 31, 2023, the company had **$637.8 million** available for revolving loans under its Credit Agreement[65](index=65&type=chunk) [Note 13 - Segment Information](index=23&type=section&id=Note%2013%20-%20Segment%20Information) In Q1 FY24, Home & Outdoor net sales were **$217.1 million** and Beauty & Wellness net sales were **$257.5 million**, with both segments experiencing sales declines Segment Performance (Three Months Ended May 31, 2023) | (in thousands) | Home & Outdoor | Beauty & Wellness | Total | | :--- | :--- | :--- | :--- | | **Sales revenue, net** | **$217,144** | **$257,528** | **$474,672** | | Operating income | $22,116 | $18,525 | $40,641 | Segment Performance (Three Months Ended May 31, 2022) | (in thousands) | Home & Outdoor | Beauty & Wellness | Total | | :--- | :--- | :--- | :--- | | **Sales revenue, net** | **$234,263** | **$273,815** | **$508,078** | | Operating income | $29,793 | $4,146 | $33,939 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q1 FY24 consolidated net sales declined **6.6%** due to organic business softness, while operating margin improved to **8.6%** and operating cash flow was **$121.1 million** [Overview](index=27&type=section&id=Overview) Helen of Troy is a global consumer products company in Phase II of its transformation, focusing on Leadership Brands and 'Project Pegasus' for margin expansion - The company operates two segments: **Home & Outdoor** and **Beauty & Wellness**[92](index=92&type=chunk)[93](index=93&type=chunk) - Phase II of the company's transformation focuses on organic sales growth, margin expansion, and strategic capital deployment, with an emphasis on **Leadership Brands**[94](index=94&type=chunk) - **Project Pegasus** is a global restructuring plan intended to expand operating margins through initiatives designed to improve efficiency and reduce costs[95](index=95&type=chunk) [Significant Trends Impacting the Business](index=28&type=section&id=Significant%20Trends%20Impactin%20the%20Business) Key trends include 'Project Pegasus' workforce reduction, ongoing Brita patent litigation, macroeconomic pressures, and increased online sales to **26%** of total revenue - **Project Pegasus** will reduce the global workforce by approximately **10%** and targets **$75-$85 million** in annualized pre-tax operating profit improvements[99](index=99&type=chunk)[100](index=100&type=chunk) - The company faces patent litigation from **Brita LP** regarding its **PUR** water filtration systems, with a final **ITC** decision expected by **September 19, 2023**[104](index=104&type=chunk) - Online sales grew to approximately **26%** of total consolidated net sales revenue for the quarter, an **8%** increase from the prior year[109](index=109&type=chunk) [Results of Operations](index=33&type=section&id=RESULTS%20OF%20OPERATIONS) Q1 FY24 consolidated net sales declined **6.6%** to **$474.7 million**, while gross margin improved to **45.4%** and operating income rose **19.7%** despite higher interest expense Net Sales Revenue Change (Q1 FY24 vs Q1 FY23) | Category | % Change | | :--- | :--- | | **Total net sales revenue** | **(6.6)%** | | Organic business | (7.7)% | | Acquisition (Curlsmith) | 1.2% | | Impact of foreign currency | (0.1)% | - Gross profit margin increased **3.8 percentage points** to **45.4%**, primarily due to the favorable comparative impact of prior year **EPA compliance costs**, a more favorable product/customer mix, and lower inbound freight costs[137](index=137&type=chunk)[139](index=139&type=chunk) - **SG&A ratio** increased to **35.3%** from **34.9%**, driven by a **$4.2 million** charge for the **Bed, Bath & Beyond** bankruptcy and the unfavorable leverage from lower sales[138](index=138&type=chunk)[140](index=140&type=chunk) - Interest expense increased significantly to **$14.1 million** from **$4.4 million** due to higher average interest rates[152](index=152&type=chunk) GAAP vs. Non-GAAP EPS | (per share data) | Three Months Ended May 31, 2023 | Three Months Ended May 31, 2022 | | :--- | :--- | :--- | | Diluted EPS (GAAP) | $0.94 | $1.02 | | **Adjusted Diluted EPS (non-GAAP)** | **$1.94** | **$2.41** | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) The company generated **$121.1 million** in operating cash flow in Q1 FY24, enabling **$99.6 million** in debt repayment and strengthening liquidity - Operating activities provided net cash of **$121.1 million** for the quarter, compared to a use of **$38.4 million** in the prior year, primarily due to decreases in cash used for inventory and accounts receivable[164](index=164&type=chunk) - Investing activities used **$11.6 million**, a significant decrease from **$222.5 million** in the prior year, which included the **Curlsmith** acquisition and higher capital expenditures for a new distribution facility[165](index=165&type=chunk) - Financing activities used **$99.6 million**, primarily for net repayments on revolving loans under the Credit Agreement[166](index=166&type=chunk) - As of May 31, 2023, the company had **$38.9 million** in cash and cash equivalents and **$637.8 million** available for borrowings under its Credit Agreement[159](index=159&type=chunk)[170](index=170&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=45&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes in market risk disclosures were reported since the last Form 10-K, with foreign currency and interest rate volatility remaining key risks - There have been no material changes in the information provided in the section entitled 'Quantitative and Qualitative Disclosures about Market Risk' in our Form 10-K[176](index=176&type=chunk) [Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of May 31, 2023, with no material changes to internal controls - The **CEO** and **CFO** concluded that the company's disclosure controls and procedures were effective as of May 31, 2023[178](index=178&type=chunk) - No change in internal control over financial reporting was identified during the fiscal quarter that has materially affected, or is reasonably likely to materially affect, internal controls[179](index=179&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=46&type=section&id=Item%201.%20Legal%20Proceedings) No material changes in legal proceedings were reported since the last Form 10-K, except for updates on the **Brita LP** patent litigation in Note 8 - There have been no material changes in legal proceedings from those disclosed in the Form 10-K, except as updated in Note 8 regarding the **Brita** patent litigation[180](index=180&type=chunk) [Risk Factors](index=46&type=section&id=Item%201A.%20Risk%20Factors) No material changes to the risk factors previously disclosed in the Annual Report on Form 10-K were reported - Since the filing of our Form 10-K, there have been no material changes in our risk factors from those disclosed therein[181](index=181&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=47&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased shares under a **$500 million** authorization, with **$399.2 million** remaining available as of May 31, 2023 - The Board of Directors authorized a repurchase of up to **$500 million** of common stock, effective August 25, 2021, for a three-year period[182](index=182&type=chunk) Share Repurchase Activity (Q1 FY24) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | March 2023 | 8,723 | $110.30 | | April 2023 | 190 | $90.01 | | May 2023 | 35,719 | $97.05 | | **Total** | **44,632** | **$99.61** | - As of May 31, 2023, **$399.2 million** remained available for repurchase under the current authorization[44](index=44&type=chunk)[183](index=183&type=chunk) [Exhibits](index=48&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including employment agreements, **CEO/CFO** certifications, and **iXBRL** financial statements - Exhibits filed include an employment agreement, **CEO/CFO** certifications (Rule 13a-14(a) and Section 906), and financial statements in **iXBRL** format[185](index=185&type=chunk)