Helen of Troy(HELE) - 2026 Q2 - Quarterly Results

Executive Summary CEO and CFO Statements Helen of Troy's new CEO, Mr G Scott Uzzell, expressed confidence in the company's ability to achieve a comeback by focusing on consumers, innovation, and sustainable growth - New CEO Mr G Scott Uzzell is confident in the company's comeback, focusing on consumers, innovation, and sustainable growth[4] - CFO Mr Brian L Grass noted Q2 net sales and adjusted EPS were at the better end of guidance, despite significant business disruption and cost headwinds[4] - Company is implementing measures to enhance execution, operational efficiency, go-to-market effectiveness, and fuel product-driven growth[4] Second Quarter Fiscal 2026 Financial Highlights Helen of Troy Limited reported a consolidated net sales decline of 8.9% to $431.8 million in Q2 FY26, with GAAP diluted loss per share at $13.44 | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change (%) | | :-------------------------------- | :----------------- | :----------------- | :--------- | | Consolidated Net Sales Revenue | $431.8 | $474.2 | -8.9% | | Gross Profit Margin | 44.2% | 45.6% | -1.4 pp | | Operating Margin (GAAP) | (73.1)% | 7.3% | -80.4 pp | | Adjusted Operating Margin (Non-GAAP) | 6.2% | 9.8% | -3.6 pp | | GAAP Diluted EPS | ($13.44) | $0.74 | -1916.2% | | Non-GAAP Adjusted Diluted EPS | $0.59 | $1.21 | -51.2% | | Net Cash Used by Operating Activities | ($10.5) | $44.6 (Provided) | -123.5% | | Non-GAAP Adjusted EBITDA Margin | 8.4% | 11.8% | -3.4 pp | Consolidated Financial Performance (Q2 FY26 vs Q2 FY25) Net Sales Revenue Consolidated net sales revenue decreased by 8.9% to $431.8 million, driven by a 16.0% organic business decline, partially offset by the Olive & June acquisition | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change ($ Millions) | Change (%) | | :----------------------- | :----------------- | :----------------- | :------------------ | :--------- | | Consolidated Net Sales | $431.8 | $474.2 | ($42.4) | -8.9% | | Organic Business Decline | ($76.1) | N/A | N/A | -16.0% | | Olive & June Acquisition | $33.4 | N/A | N/A | +7.0% | - Organic business decline was due to lower sales of thermometers, heaters, hair appliances in Beauty & Wellness, and decreased insulated beverageware and home categories in Home & Outdoor[7] Gross Profit and SG&A Consolidated gross profit margin decreased by 140 basis points to 44.2%, while the SG&A ratio increased by 310 basis points to 41.0% | Metric | Q2 FY26 | Q2 FY25 | Change (bps) | | :-------------------------------- | :------ | :------ | :----------- | | Consolidated Gross Profit Margin | 44.2% | 45.6% | -140 | | Consolidated SG&A Ratio | 41.0% | 37.9% | +310 | - Gross profit margin was negatively impacted by approximately 200 basis points due to higher tariffs on cost of goods sold[7] - SG&A ratio increase was partially offset by favorable comparative impact of higher distribution center expense in the prior year due to automation startup issues[7] Operating Income/Loss and Asset Impairment The company recognized significant non-cash asset impairment charges of $326.4 million, leading to a consolidated operating loss of $315.7 million | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change ($ Millions) | | :-------------------------- | :----------------- | :----------------- | :------------------ | | Asset Impairment Charges | $326.4 | — | +$326.4 | | Consolidated Operating (Loss) Income | ($315.7) | $34.9 | ($350.6) | - The impairment charges reduced goodwill by $292.6 million and other intangible assets by $33.8 million, impacting both Beauty & Wellness and Home & Outdoor segments[7] Interest Expense and Income Tax Interest expense increased to $14.2 million, primarily due to higher average borrowings, while the income tax benefit was 6.4% of loss before tax | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change ($ Millions) | | :-------------------------------- | :----------------- | :----------------- | :------------------ | | Interest Expense | $14.2 | $13.2 | +$1.0 | | Income Tax (Benefit) Expense (% of pre-tax) | (6.4)% | 22.0% | -28.4 pp | - Higher average borrowings were used to fund the Olive & June acquisition, increased inventory due to forward buys in advance of tariffs, and higher tariff costs[8] Net Income/Loss and Diluted EPS The company reported a net loss of $308.6 million, or diluted loss per share of $13.44, primarily due to asset impairment charges | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change ($ Millions) | | :------------------- | :----------------- | :----------------- | :------------------ | | Net (Loss) Income | ($308.6) | $17.0 | ($325.6) | | Diluted (Loss) EPS | ($13.44) | $0.74 | ($14.18) | - The decrease in net income and diluted EPS was primarily driven by the $294.0 million after-tax asset impairment charge and lower operating income[8] Non-GAAP Adjusted Financial Measures Adjusted operating income decreased by 41.9% to $26.9 million, and adjusted diluted EPS decreased by 51.2% to $0.59 | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change ($ Millions) | Change (%) | | :-------------------------- | :----------------- | :----------------- | :------------------ | :--------- | | Adjusted Operating Income | $26.9 | $46.4 | ($19.5) | -41.9% | | Adjusted Operating Margin | 6.2% | 9.8% | -3.6 pp | N/A | | Adjusted EBITDA | $36.2 | $55.8 | ($19.6) | -35.1% | | Adjusted EBITDA Margin | 8.4% | 11.8% | -3.4 pp | N/A | | Adjusted Income | $13.5 | $27.5 | ($14.0) | -50.8% | | Adjusted Diluted EPS | $0.59 | $1.21 | ($0.62) | -51.2% | - The decrease in adjusted operating margin was primarily driven by higher tariffs on cost of goods sold (approx 200 basis points impact), increased retail trade/promotional expense, higher outbound freight costs, and unfavorable operating leverage[8] Segment Performance (Q2 FY26 vs Q2 FY25) Home & Outdoor Segment Home & Outdoor net sales revenue decreased by 13.7% to $208.7 million, resulting in an operating loss of $72.6 million due to asset impairment charges | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change ($ Millions) | Change (%) | | :-------------------------- | :----------------- | :----------------- | :------------------ | :--------- | | Net Sales Revenue | $208.7 | $241.9 | ($33.2) | -13.7% | | Operating (Loss) Income (GAAP) | ($72.6) | $31.2 | ($103.8) | -332.7% | | Asset Impairment Charges | $85.5 | — | +$85.5 | N/A | | Adjusted Operating Income (Non-GAAP) | $20.1 | $36.3 | ($16.2) | -44.6% | - Key drivers for sales decline include retailer inventory rebalancing, competition, distribution loss, and cancellation of direct import orders due to higher tariffs[12] - The 670 basis point decrease in segment operating margin (excluding impairment) was primarily due to higher tariffs, increased retail trade/promotional expense, share-based compensation, outbound freight, and unfavorable operating leverage[10][13] Beauty & Wellness Segment Beauty & Wellness net sales revenue decreased by 4.0% to $223.1 million, driven by an 18.2% organic decline, partially offset by the Olive & June acquisition | Metric | Q2 FY26 (Millions) | Q2 FY25 (Millions) | Change ($ Millions) | Change (%) | | :-------------------------- | :----------------- | :----------------- | :------------------ | :--------- | | Net Sales Revenue | $223.1 | $232.3 | ($9.2) | -4.0% | | Organic Business Decline | ($42.3) | N/A | N/A | -18.2% | | Olive & June Acquisition | $33.4 | N/A | N/A | +14.4% | | Operating (Loss) Income (GAAP) | ($243.1) | $3.7 | ($246.8) | -6670.3% | | Asset Impairment Charges | $240.9 | — | +$240.9 | N/A | | Adjusted Operating Income (Non-GAAP) | $6.9 | $10.2 | ($3.3) | -32.4% | - Organic decline in thermometry was due to evolving China market dynamics, heightened competition from domestic sellers, and weaker illness season[14] - The 260 basis point decrease in segment operating margin (excluding impairment) was primarily due to higher tariffs, increased retail trade/promotional expense, share-based compensation, outbound freight, increased marketing, and unfavorable operating leverage[15][18] Balance Sheet and Cash Flow Key Balance Sheet Items As of August 31, 2025, cash and cash equivalents increased to $22.4 million, while total debt significantly rose to $893.2 million | Metric | August 31, 2025 (Millions) | August 31, 2024 (Millions) | Change ($ Millions) | | :---------------------- | :------------------------- | :------------------------- | :------------------ | | Cash and cash equivalents | $22.4 | $20.1 | +$2.3 | | Accounts receivable turnover | 72.2 days | 69.0 days | +3.2 days | | Inventory | $528.9 | $469.6 | +$59.3 | | Total short- and long-term debt | $893.2 | $713.2 | +$180.0 | Cash Flow from Operations and Free Cash Flow Net cash provided by operating activities for the first six months of FY26 decreased to $47.9 million, and free cash flow declined to $23.0 million | Metric (Six Months Ended August 31) | FY26 (Millions) | FY25 (Millions) | Change ($ Millions) | | :---------------------------------- | :-------------- | :-------------- | :------------------ | | Net cash provided by operating activities | $47.9 | $69.9 | ($22.0) | | Free cash flow | $23.0 | $55.9 | ($32.9) | Fiscal 2026 Outlook Tariff Impact and Mitigation Helen of Troy is assessing tariff exposure and implementing mitigation plans, aiming to reduce net tariff impact on operating income to less than $20 million - Company expects to reduce cost of goods sold exposed to China tariffs to between 25% and 30% by the end of fiscal 2026, compared to the prior expectation of less than 25%[17] - Initiated significant efforts to diversify production outside of China into regions with lower tariffs or overall costs, and to source the same product in more than one region[17] - Company now believes it can reduce the net tariff impact on operating income to less than $20 million, compared to the prior expectation of less than $15 million[20] Cost Reduction Initiatives The company continues to implement cost reduction and cash flow preservation measures, including suspending non-critical projects and optimizing working capital - Suspension of non-critical projects and capital expenditures - Actions to reduce overall personnel costs and pause most project and travel expenses - Resumption of optimized marketing, promotional, and new product development investments focused on highest returns - Actions to optimize working capital and balance sheet productivity[20][22] Consolidated Net Sales Outlook For full-year fiscal 2026, Helen of Troy expects consolidated net sales revenue between $1.739 billion and $1.780 billion, implying an 8.8% to 6.7% decline | Period | Outlook Range (Millions) | Implied Decline (YoY) | | :-------------------- | :----------------------- | :-------------------- | | Full Year Fiscal 2026 | $1,739 - $1,780 | 8.8% - 6.7% | | Third Quarter Fiscal 2026 | $491 - $512 | 7.5% - 3.5% | - The sales outlook reflects continued consumer spending softness, increased macro uncertainty, a more promotional environment, and a stretched consumer[21] Segment Net Sales Outlook For fiscal 2026, Home & Outdoor net sales are expected to decline by 11.8% to 9.7%, while Beauty & Wellness net sales are projected to decline by 6.2% to 4.0% | Segment | Full Year FY26 Net Sales Decline (YoY) | Q3 FY26 Net Sales Decline/Growth (YoY) | | :---------------- | :------------------------------------- | :------------------------------------- | | Home & Outdoor | 11.8% - 9.7% | 12.8% - 8.7% | | Beauty & Wellness | 6.2% - 4.0% (incl. $109M-$112M from Olive & June) | 2.9% decline - 1.0% growth (incl. $36M-$39M from Olive & June) | GAAP and Adjusted Diluted EPS Outlook The company forecasts full-year fiscal 2026 GAAP diluted loss per share of $29.90 to $29.40 and non-GAAP adjusted diluted EPS in the range of $3.75 to $4.25 | Metric | Full Year FY26 Outlook | Q3 FY26 Outlook | | :-------------------------- | :--------------------- | :-------------- | | GAAP Diluted (Loss) EPS | ($29.90) - ($29.40) | $1.85 - $2.05 | | Adjusted Diluted EPS (Non-GAAP) | $3.75 - $4.25 | $1.55 - $1.80 | | Implied Adjusted EPS Decline (YoY) | 47.7% - 40.7% | 41.9% - 32.6% | - Adjusted diluted EPS outlook reflects pressures from a more promotional environment, consumer trade-down, unfavorable product mix, higher commodity/product costs (offset by Project Pegasus and price increases), growth investments, and unfavorable operating leverage[28] Key Assumptions for Outlook The outlook assumes an average cough, cold, and flu season, continued softer consumer demand, increased competition, and conservative retailer inventory management - Average cough, cold, and flu season - Continued softer consumer demand and increased competition - Consumer trade-down behavior, reflected in heightened deal-seeking and emphasis on essential categories - Conservative retailer inventory management in response to demand trends[27] - September 2025 foreign currency exchange rates will remain constant - Full year fiscal 2026 expected interest expense in the range of $56 million to $57 million - Third quarter fiscal 2026 reported GAAP effective tax rate range of (10.0)% to (16.0)% and adjusted effective tax rate range of 22.0% to 25.0% - Fiscal 2026 reported GAAP effective tax rate range of (0.8)% to (0.6)% and adjusted effective tax rate range of 15.0% to 16.0% - Full year fiscal 2026 estimated weighted average diluted shares outstanding of 23.0 million[28] Debt Covenants As of August 31, 2025, Helen of Troy was in compliance with all credit agreement covenants, but expects to seek an amendment during Q3 FY26 - Company was in compliance with all credit agreement covenants as of August 31, 2025[26] - Company expects to proactively seek an amendment during Q3 FY26 to extend temporary adjustments to the maximum leverage ratio and reduce the minimum interest coverage ratio[26] - Preliminary indications are that lenders will be supportive of the potential amendment, but there is no assurance of success[26] Additional Company Information Conference Call and Webcast Helen of Troy Limited will host a teleconference and webcast on October 9, 2025, at 9:00 a.m Eastern Time to discuss its earnings results - Teleconference and webcast scheduled for October 9, 2025, at 9:00 a.m Eastern Time[30] - Replay available via telephone until October 23, 2025, and webcast replay available on the website for one year[30] Non-GAAP Financial Measures Disclosure The company uses non-GAAP financial measures to supplement GAAP results, providing useful information for management and investors regarding financial trends - Non-GAAP financial measures are used to supplement GAAP results and provide additional perspective on financial and business trends[31] - These measures are not GAAP alternatives and may differ from those of other companies; undue reliance should not be placed on them[31] About Helen of Troy Limited Helen of Troy Limited is a global consumer products company known for designing, developing, and marketing branded home, outdoor, beauty, and wellness products - Helen of Troy Limited is a leading global consumer products company[32] - Portfolio includes well-known brands like OXO, Hydro Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools, Drybar, Curlsmith, Revlon, and Olive & June[32] Forward-Looking Statements The press release contains forward-looking statements subject to various risks beyond the company's control, including geographic concentration and cybersecurity incidents - Forward-looking statements are subject to risks, many beyond the company's control, that could cause actual results to differ materially[33] - Risks include geographic concentration of distribution facilities, cyber incidents, ability to introduce new products, dependence on large customers and third-party manufacturers (mostly in Asia) - Other risks involve trade barriers, economic downturns, public health crises, reliance on key officers, licensed trademarks, and the ability to execute strategic initiatives like acquisitions and restructuring plans - Risks also include significant tariffs on imports from China, Mexico or Vietnam, changes in laws and regulations (environmental, employment, tax), and global legal developments regarding privacy and data security[33][34] Investor Contact Contact information for investor relations is provided for Helen of Troy Limited and ICR, Inc - Investor contact information is provided for Helen of Troy Limited (Anne Rakunas) and ICR, Inc (Allison Malkin)[35] Detailed Financial Tables and Reconciliations Condensed Consolidated Statements of Income This section presents the unaudited condensed consolidated statements of income for the three and six months ended August 31, 2025, and 2024 Three Months Ended August 31: | Metric (in thousands) | 2025 | % of Sales | 2024 | % of Sales | | :-------------------- | :---------- | :--------- | :---------- | :--------- | | Sales revenue, net | $431,781 | 100.0% | $474,221 | 100.0% | | Cost of goods sold | $241,100 | 55.8% | $258,151 | 54.4% | | Gross profit | $190,681 | 44.2% | $216,070 | 45.6% | | SG&A | $176,999 | 41.0% | $179,692 | 37.9% | | Asset impairment charges | $326,394 | 75.6% | — | —% | | Restructuring charges | $3,005 | 0.7% | $1,526 | 0.3% | | Operating (loss) income | ($315,717) | (73.1)% | $34,852 | 7.3% | | Interest expense | $14,221 | 3.3% | $13,216 | 2.8% | | Net (loss) income | ($308,643) | (71.5)% | $17,014 | 3.6% | | Diluted (loss) earnings per share | ($13.44) | | $0.74 | | Six Months Ended August 31: | Metric (in thousands) | 2025 | % of Sales | 2024 | % of Sales | | :-------------------- | :---------- | :--------- | :---------- | :--------- | | Sales revenue, net | $803,436 | 100.0% | $891,068 | 100.0% | | Cost of goods sold | $437,744 | 54.5% | $471,919 | 53.0% | | Gross profit | $365,692 | 45.5% | $419,149 | 47.0% | | SG&A | $344,663 | 42.9% | $350,173 | 39.3% | | Asset impairment charges | $740,779 | 92.2% | — | —% | | Restructuring charges | $3,005 | 0.4% | $3,361 | 0.4% | | Operating (loss) income | ($722,755) | (90.0)% | $65,615 | 7.4% | | Interest expense | $28,029 | 3.5% | $25,759 | 2.9% | | Net (loss) income | ($759,361) | (94.5)% | $23,218 | 2.6% | | Diluted (loss) earnings per share | ($33.09) | | $1.00 | | Consolidated Net Sales by Geographic Region This table provides a breakdown of consolidated net sales revenue by geographic region (Domestic and International) for the three and six months ended August 31, 2025, and 2024 Three Months Ended August 31: | Region (in thousands) | 2025 | % of Total | 2024 | % of Total | | :-------------------- | :---------- | :--------- | :---------- | :--------- | | Domestic sales revenue, net | $330,496 | 76.5% | $365,750 | 77.1% | | International sales revenue, net | $101,285 | 23.5% | $108,471 | 22.9% | | Total sales revenue, net | $431,781 | 100.0% | $474,221 | 100.0% | Six Months Ended August 31: | Region (in thousands) | 2025 | % of Total | 2024 | % of Total | | :-------------------- | :---------- | :--------- | :---------- | :--------- | | Domestic sales revenue, net | $608,456 | 75.7% | $666,430 | 74.8% | | International sales revenue, net | $194,980 | 24.3% | $224,638 | 25.2% | | Total sales revenue, net | $803,436 | 100.0% | $891,068 | 100.0% | Reconciliation of GAAP to Non-GAAP Operating Income/Margin This section provides a reconciliation of GAAP operating income/loss and operating margin to adjusted operating income and adjusted operating margin (non-GAAP) for both segments and consolidated totals Three Months Ended August 31, 2025 (Total): | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating loss, as reported (GAAP) | ($315,717) | (73.1)% | | Add: Asset impairment charges | $326,394 | 75.6% | | Add: Restructuring charges | $3,005 | 0.7% | | Add: Amortization of intangible assets | $3,885 | 0.9% | | Add: Non-cash share-based compensation | $9,372 | 2.2% | | Adjusted operating income (non-GAAP) | $26,939 | 6.2% | Three Months Ended August 31, 2024 (Total): | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating income, as reported (GAAP) | $34,852 | 7.3% | | Add: Restructuring charges | $1,526 | 0.3% | | Add: Amortization of intangible assets | $4,539 | 1.0% | | Add: Non-cash share-based compensation | $5,487 | 1.2% | | Adjusted operating income (non-GAAP) | $46,404 | 9.8% | Six Months Ended August 31, 2025 (Total): | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating loss, as reported (GAAP) | ($722,755) | (90.0)% | | Add: Asset impairment charges | $740,779 | 92.2% | | Add: CEO succession costs | $3,484 | 0.4% | | Add: Restructuring charges | $3,005 | 0.4% | | Add: Amortization of intangible assets | $8,874 | 1.1% | | Add: Non-cash share-based compensation | $9,668 | 1.2% | | Adjusted operating income (non-GAAP) | $43,055 | 5.4% | Six Months Ended August 31, 2024 (Total): | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating income, as reported (GAAP) | $65,615 | 7.4% | | Add: Restructuring charges | $3,361 | 0.4% | | Add: Amortization of intangible assets | $9,059 | 1.0% | | Add: Non-cash share-based compensation | $11,320 | 1.3% | | Adjusted operating income (non-GAAP) | $89,355 | 10.0% | Reconciliation of GAAP Operating Income to EBITDA and Adjusted EBITDA This table reconciles GAAP operating income/loss to EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin for the three and six months ended August 31, 2025, and 2024 Three Months Ended August 31, 2025 (Total): | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating loss, as reported (GAAP) | ($315,717) | (73.1)% | | Add: Depreciation and amortization | $12,860 | 3.0% | | EBITDA (non-GAAP) | ($302,608) | (70.1)% | | Add: Asset impairment charges | $326,394 | 75.6% | | Add: Restructuring charges | $3,005 | 0.7% | | Add: Non-cash share-based compensation | $9,372 | 2.2% | | Adjusted EBITDA (non-GAAP) | $36,163 | 8.4% | Three Months Ended August 31, 2024 (Total): | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating income, as reported (GAAP) | $34,852 | 7.3% | | Add: Depreciation and amortization | $13,792 | 2.9% | | EBITDA (non-GAAP) | $48,814 | 10.3% | | Add: Restructuring charges | $1,526 | 0.3% | | Add: Non-cash share-based compensation | $5,487 | 1.2% | | Adjusted EBITDA (non-GAAP) | $55,827 | 11.8% | Six Months Ended August 31, 2025 (Total): | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating loss, as reported (GAAP) | ($722,755) | (90.0)% | | Add: Depreciation and amortization | $26,944 | 3.4% | | EBITDA (non-GAAP) | ($695,254) | (86.5)% | | Add: Asset impairment charges | $740,779 | 92.2% | | Add: CEO succession costs | $3,484 | 0.4% | | Add: Restructuring charges | $3,005 | 0.4% | | Add: Non-cash share-based compensation | $9,668 | 1.2% | | Adjusted EBITDA (non-GAAP) | $61,682 | 7.7% | Six Months Ended August 31, 2024 (Total): | Metric (in thousands) | Amount | % of Sales | | :-------------------- | :---------- | :--------- | | Operating income, as reported (GAAP) | $65,615 | 7.4% | | Add: Depreciation and amortization | $27,628 | 3.1% | | EBITDA (non-GAAP) | $93,513 | 10.5% | | Add: Restructuring charges | $3,361 | 0.4% | | Add: Non-cash share-based compensation | $11,320 | 1.3% | | Adjusted EBITDA (non-GAAP) | $108,194 | 12.1% | Reconciliation of GAAP Net Income to EBITDA and Adjusted EBITDA This table reconciles GAAP net income/loss to EBITDA, Adjusted EBITDA, and Adjusted EBITDA Margin for the three and six months ended August 31, 2025, and 2024, and for the trailing twelve months ended August 31, 2025 Three Months Ended August 31: | Metric (in thousands) | 2025 | % of Sales | 2024 | % of Sales | | :-------------------- | :---------- | :--------- | :---------- | :--------- | | Net (loss) income, as reported (GAAP) | ($308,643) | (71.5)% | $17,014 | 3.6% | | Add: Interest expense | $14,221 | 3.3% | $13,216 | 2.8% | | Add: Income tax (benefit) expense | ($21,046) | (4.9)% | $4,792 | 1.0% | | Add: Depreciation and amortization | $12,860 | 3.0% | $13,792 | 2.9% | | EBITDA (non-GAAP) | ($302,608) | (70.1)% | $48,814 | 10.3% | | Add: Asset impairment charges | $326,394 | 75.6% | — | —% | | Add: Restructuring charges | $3,005 | 0.7% | $1,526 | 0.3% | | Add: Non-cash share-based compensation | $9,372 | 2.2% | $5,487 | 1.2% | | Adjusted EBITDA (non-GAAP) | $36,163 | 8.4% | $55,827 | 11.8% | Six Months Ended August 31: | Metric (in thousands) | 2025 | % of Sales | 2024 | % of Sales | | :-------------------- | :---------- | :--------- | :---------- | :--------- | | Net (loss) income, as reported (GAAP) | ($759,361) | (94.5)% | $23,218 | 2.6% | | Add: Interest expense | $28,029 | 3.5% | $25,759 | 2.9% | | Add: Income tax expense | $9,134 | 1.1% | $16,908 | 1.9% | | Add: Depreciation and amortization | $26,944 | 3.4% | $27,628 | 3.1% | | EBITDA (non-GAAP) | ($695,254) | (86.5)% | $93,513 | 10.5% | | Add: Asset impairment charges | $740,779 | 92.2% | — | —% | | Add: CEO succession costs | $3,484 | 0.4% | — | —% | | Add: Restructuring charges | $3,005 | 0.4% | $3,361 | 0.4% | | Add: Non-cash share-based compensation | $9,668 | 1.2% | $11,320 | 1.3% | | Adjusted EBITDA (non-GAAP) | $61,682 | 7.7% | $108,194 | 12.1% | Twelve Months Ended August 31, 2025: | Metric (in thousands) | Amount | | :-------------------- | :---------- | | Net income (loss), as reported (GAAP) | ($658,828) | | Add: Interest expense | $54,192 | | Add: Income tax expense (benefit) | ($39,861) | | Add: Depreciation and amortization | $54,364 | | EBITDA (non-GAAP) | ($590,133) | | Add: Acquisition-related expenses | $3,035 | | Add: Asset impairment charges | $792,234 | | Add: CEO succession costs | $3,484 | | Add: Restructuring charges | $14,466 | | Add: Non-cash share-based compensation | $19,724 | | Adjusted EBITDA (non-GAAP) | $242,810 | Reconciliation of GAAP Income/EPS to Adjusted Income/EPS This section provides a detailed reconciliation of GAAP (loss) income and diluted (loss) earnings per share to adjusted income and adjusted diluted earnings per share (non-GAAP) for the three and six months ended August 31, 2025, and 2024 Three Months Ended August 31, 2025: | Metric | (Loss) Income Before Tax (Thousands) | Tax (Thousands) | Net of Tax (Thousands) | Diluted (Loss) EPS | | :-------------------------------- | :--------------------------------- | :-------------- | :--------------------- | :----------------- | | As reported (GAAP) | ($329,689) | ($21,046) | ($308,643) | ($13.44) | | Add: Asset impairment charges | $326,394 | $32,419 | $293,975 | $12.77 | | Add: Intangible asset reorganization | — | ($13,485) | $13,485 | $0.59 | | Add: Restructuring charges | $3,005 | $421 | $2,584 | $0.11 | | Add: Amortization of intangible assets | $3,885 | $669 | $3,216 | $0.14 | | Add: Non-cash share-based compensation | $9,372 | $445 | $8,927 | $0.39 | | Adjusted (non-GAAP) | $12,967 | ($577) | $13,544 | $0.59 | Three Months Ended August 31, 2024: | Metric | Income Before Tax (Thousands) | Tax (Thousands) | Net of Tax (Thousands) | Diluted Earnings Per Share | | :-------------------------------- | :---------------------------- | :-------------- | :--------------------- | :------------------------- | | As reported (GAAP) | $21,806 | $4,792 | $17,014 | $0.74 | | Add: Restructuring charges | $1,526 | $138 | $1,388 | $0.06 | | Add: Amortization of intangible assets | $4,539 | $661 | $3,878 | $0.17 | | Add: Non-cash share-based compensation | $5,487 | $221 | $5,266 | $0.23 | | Adjusted (non-GAAP) | $33,358 | $5,812 | $27,546 | $1.21 | Six Months Ended August 31, 2025: | Metric | (Loss) Income Before Tax (Thousands) | Tax (Thousands) | Net of Tax (Thousands) | Diluted (Loss) EPS | | :-------------------------------- | :--------------------------------- | :-------------- | :--------------------- | :----------------- | | As reported (GAAP) | ($750,227) | $9,134 | ($759,361) | ($33.09) | | Add: Asset impairment charges | $740,779 | $10,650 | $730,129 | $31.76 | | Add: CEO succession costs | $3,484 | $153 | $3,331 | $0.14 | | Add: Intangible asset reorganization | — | ($29,959) | $29,959 | $1.30 | | Add: Restructuring charges | $3,005 | $421 | $2,584 | $0.11 | | Add: Amortization of intangible assets | $8,874 | $1,551 | $7,323 | $0.32 | | Add: Non-cash share-based compensation | $9,668 | $602 | $9,066 | $0.39 | | Adjusted (non-GAAP) | $15,583 | ($7,448) | $23,031 | $1.00 | Six Months Ended August 31, 2024: | Metric | Income Before Tax (Thousands) | Tax (Thousands) | Net of Tax (Thousands) | Diluted Earnings Per Share | | :-------------------------------- | :---------------------------- | :-------------- | :--------------------- | :------------------------- | | As reported (GAAP) | $40,126 | $16,908 | $23,218 | $1.00 | | Add: Barbados tax reform | — | ($6,045) | $6,045 | $0.26 | | Add: Restructuring charges | $3,361 | $303 | $3,058 | $0.13 | | Add: Amortization of intangible assets | $9,059 | $1,322 | $7,737 | $0.33 | | Add: Non-cash share-based compensation | $11,320 | $485 | $10,835 | $0.47 | | Adjusted (non-GAAP) | $63,866 | $12,973 | $50,893 | $2.19 | Selected Consolidated Balance Sheet and Cash Flow Information This section provides selected unaudited consolidated balance sheet data as of August 31, 2025, and 2024, and cash flow information for the six months ended August 31, 2025, and 2024 Balance Sheet (in thousands): | Metric | August 31, 2025 | August 31, 2024 | | :-------------------- | :-------------- | :-------------- | | Cash and cash equivalents | $22,370 | $20,137 | | Receivables, net | $350,231 | $365,675 | | Inventory | $528,893 | $469,625 | | Total assets, current | $938,129 | $900,635 | | Total assets | $2,407,554 | $2,880,377 | | Total liabilities, current | $549,952 | $508,696 | | Total long-term liabilities | $931,320 | $804,101 | | Total debt | $893,220 | $713,235 | | Stockholders' equity | $926,282 | $1,567,580 | Cash Flow (Six Months Ended August 31, in thousands): | Metric | 2025 | 2024 | | :-------------------- | :---------- | :---------- | | Depreciation and amortization | $26,944 | $27,628 | | Net cash provided by operating activities | $47,868 | $69,916 | | Capital and intangible asset expenditures | $24,832 | $14,026 | | Net debt (repayments) proceeds | ($23,231) | $46,925 | | Payments for repurchases of common stock | $1,482 | $103,144 | Reconciliation of GAAP Net Cash Provided by Operating Activities to Free Cash Flow This table reconciles GAAP net cash provided by operating activities to free cash flow (non-GAAP) for the six months ended August 31, 2025, and 2024 Six Months Ended August 31 (in thousands): | Metric | 2025 | 2024 | | :-------------------- | :---------- | :---------- | | Net cash provided by operating activities (GAAP) | $47,868 | $69,916 | | Less: Capital and intangible asset expenditures | ($24,832) | ($14,026) | | Free cash flow (non-GAAP) | $23,036 | $55,890 | Reconciliation of Net Leverage Ratio This table presents the calculation of the Net Leverage Ratio (non-GAAP) for the twelve months ended August 31, 2025, showing the components of Adjusted EBITDA and net debt Twelve Months Ended August 31, 2025 (in thousands): | Metric | Amount | | :-------------------- | :---------- | | Adjusted EBITDA (non-GAAP) | $242,810 | | Pro forma effect of the Olive & June acquisition | $6,260 | | Adjusted EBITDA per the credit agreement | $249,070 | | Total borrowings under the credit agreement, as reported (GAAP) | $898,619 | | Add: Outstanding letters of credit | $9,460 | | Less: Unrestricted cash and cash equivalents | ($27,227) | | Net debt | $880,852 | | Net leverage ratio (non-GAAP) | 3.54 | Third Quarter and Annual Fiscal 2026 Outlook for Net Sales Revenue and EPS Reconciliation This section provides the outlook for consolidated net sales revenue and EPS reconciliations for Q3 and full fiscal year 2026 Third Quarter Fiscal 2026 Outlook: | Metric | Range (Thousands) | | :-------------------- | :---------------- | | Net sales revenue | $491,000 - $512,000 | | Net sales revenue decline | (7.5)% - (3.5)% | Annual Fiscal 2026 Outlook: | Metric | Range (Thousands) | | :-------------------- | :---------------- | | Net sales revenue | $1,739,000 - $1,780,000 | | Net sales revenue decline | (8.8)% - (6.7)% | Third Quarter Fiscal 2026 Outlook (EPS): | Metric | Diluted EPS (GAAP) | Adjusted Diluted EPS (Non-GAAP) | | :-------------------- | :----------------- | :------------------------------ | | Range | $1.85 - $2.05 | $1.55 - $1.80 | | Effective Tax Rate | (16.0)% - (10.0)% | 25.0% - 22.0% | Annual Fiscal 2026 Outlook (EPS): | Metric | Diluted (Loss) EPS (GAAP) | Adjusted Diluted EPS (Non-GAAP) | | :-------------------- | :------------------------ | :------------------------------ | | Range | ($29.90) - ($29.40) | $3.75 - $4.25 | | Effective Tax Rate | (0.6)% - (0.8)% | 16.0% - 15.0% | Notes to Press Release This section provides detailed notes explaining non-GAAP financial measures, organic business definitions, acquisition details, and other financial adjustments - Provides definitions and explanations for non-GAAP financial measures such as Adjusted Operating Income, Adjusted EBITDA, and Free Cash Flow[51] - Clarifies that 'Organic business' excludes the first twelve months from acquisition date and foreign currency impact, while 'Acquisition' refers to Olive & June sales[51] - Explains specific adjustments like asset impairment charges, intangible asset reorganization, CEO succession costs, and Barbados tax reform[51]