Helen of Troy (HELE) Q2 2027 Earnings Call Transcript

Tariff refunds boost margins as debt falls $221 million.

Tariff refunds boost margins as debt falls $221 million. Need a quote from a Motley Fool analyst? Email [email protected] Helen of Troy Limited ( HELE +0.96% ) reported second quarter results characterized by significant margin expansion and debt reduction as management executes a multiyear transformation road map. Management reported that the company achieved its net sales targets while exceeding internal expectations for adjusted diluted EPS and adjusted EBITDA. The company utilized $26.9 million in gross pretax tariff refunds during the quarter to fund strategic reinvestments in brand building, packaging redesign, and organizational structure. Financial health improved through a $221 million year-over-year reduction in total debt and a decrease in inventory levels. Management raised the full-year guidance for adjusted diluted EPS and free cash flow while narrowing the revenue outlook to reflect current consumer demand trends and a promotional retail environment. Operator: Greetings, and welcome to Helen of Troy Limited Second Quarter 2027 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Anne Rakunas, Senior Director, IR and Corporate Communications. You may begin. Anne Rakunas: Thank you, operator. Good morning, everyone. Welcome to Helen of Troy's Second Quarter Fiscal '27 Earnings Conference Call. The agenda for the call this morning is as follows: I will begin with a brief description of forward-looking statements. Scott Uzzell, our CEO, will then share his thoughts on progress in the quarter; and Brian Grass, our CFO, will provide an overview of our financial performance in the second quarter and our revised expectations for the full year fiscal '27.

Following our prepared remarks, we'll open up the call for Q&A. This conference call may contain certain forward-looking statements that are based on management's current expectations with respect to future events or financial performance. Generally, the words anticipates, believes, expects and other similar words are words identifying forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties that could cause anticipated results to differ materially from the actual results. This conference call may also include information that may be considered non-GAAP financial information. These non-GAAP measures are not an alternative to GAAP financial information and may be calculated differently than the non-GAAP financial information disclosed by other parties. The company cautions listeners not to place undue reliance on forward-looking statements or non-GAAP information. Before I turn the call over to Scott, I would like to inform everyone that a copy of today's earnings release can be found on the Investor Relations section of our website 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. We've also posted an investor presentation to our website. And I will now turn the call over to Scott. George Uzzell: Thank you, Anne. Good morning, everyone. Thank you for joining us. When we spoke in July, I shared that we were focused on strengthening the critical fundamentals of our company. We continue to make progress to become a better Helen of Troy on the road becoming a bigger Helen of Troy.

Our Q2 results reflect continued execution against the priorities outlined in our multiyear road map. Our Q2 sales were in line with our outlook and our adjusted diluted EPS came in ahead. But as I stated over the last several quarters, our recovery will not be linear. In fiscal '27, we are squarely focused on demonstrating markers of progress to set us up for sustained and repeat strong performance over many years to come. It's about brand growth, driving sales growth through disciplined investment in brands and categories where we believe we have a clear path to win. It's about marketplace execution, realizing the value of our brands through premium positioning and strong market execution to continue strengthening our gross margin. And it's about balance sheet productivity, paying down debt further. We're pursuing these priorities through 3 foundational pillars paired with continued balance sheet discipline. We continue to execute against all these areas. We are 2 quarters into our plan to making a better Helen of Troy, and we are making progress. The operating environment continues to be dynamic, but I truly believe what we need to do to reach our aspirations in our control, and we are encouraged by what we see across several areas of the business. I want to highlight a few Q2 examples. We grew sales year-over-year across all 3 Home & Outdoor brands. Osprey led growth again this quarter, reflecting strong consumer and category performance, new product introductions, continued improvement in our international distribution network. OXO benefited from targeted actions to improve inventory composition, net distribution gains and new product introductions.

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