- Acquires fast-growing, award-winning nail care category
innovator to its portfolio of leading brands for a total purchase
price of $240 million, including a $15 million earnout; implies a
multiple of less than 11x estimated calendar year 2025 adjusted
EBITDA(2), before synergies
- Adds a high-margin, complementary Beauty consumables business
that is expected to be immediately accretive to Helen of Troy’s
revenue growth rate, gross profit margin, adjusted EBITDA
margin(3), adjusted diluted EPS growth rate(1) and free cash flow
conversion(4)
- Plans to employ a stand-alone but supported operating model
that retains an experienced and passionate management team,
including Olive & June Founder / CEO, Sarah Gibson Tuttle, and
leverages Helen of Troy’s complementary capabilities and scale to
accelerate Olive & June’s growth
- Intends to update its outlook for fiscal 2025 to include the
incremental impact of Olive & June in conjunction with the
third quarter earnings release on January 9, 2025
- The Company will hold a conference call at 8:30 a.m. ET on
Friday, November 22, 2024
Helen of Troy Limited (NASDAQ: HELE), designer,
developer, and worldwide marketer of branded consumer home,
outdoor, beauty, and wellness products, today announced that it has
entered into a definitive merger agreement to acquire the business
of Olive & June, LLC. Olive & June, founded in 2013, is an
innovative, omni-channel nail care brand trailblazing the DIY nail
revolution. Within the multi-billion-dollar beauty industry, Olive
& June plays across all nail care categories: polish,
artificial, tools, treatment, and care, delivering a salon-quality
experience at home. Its consumer solutions-driven product
innovation and digital-first model to engage and educate consumers
drives brand loyalty and social media engagement well above the
category averages.
The Olive & June acquisition is an excellent, complementary
fit with Helen of Troy’s strategic goal of Continuing Better
Together M&A. Helen of Troy believes it can add value to Olive
& June and use its scalable operating platform, while Olive
& June can accelerate profitable growth for Helen of Troy by
helping to further diversify its product offerings. As the Company
continues to focus on elevating the health and performance of its
core brand portfolio, it intends for Olive & June to operate in
a stand-alone but supported model, with the brand continuing to
operate largely as it is operated today except in areas where the
Company believes it can accelerate Olive & June’s momentum.
The total purchase consideration is expected to be $225 million
in cash at closing, subject to certain customary closing
adjustments, and a $15 million earnout subject to performance over
three years. The total purchase price implies a multiple of less
than 11x estimated calendar year 2025 adjusted EBITDA before
synergies, which compares favorably to the Company’s recent
transactions. The Company expects Olive & June’s calendar year
2024 net sales revenue to be approximately $92 million.
The acquisition is expected to be immediately accretive to Helen
of Troy’s revenue growth rate, gross profit margin, adjusted EBITDA
margin, adjusted diluted EPS growth rate and free cash flow
conversion. The Company expects its pro forma net leverage ratio(5)
to be 3x or less at the estimated time of closing. In September
2024, the Company executed interest rate swaps on an additional
$250 million of notional value with respect to its outstanding
variable rate debt. The additional swaps fix the interest rate for
the additional notional value at an average SOFR rate of 3.7%
compared to current 30-day SOFR of 4.6% for an average period of 18
months from the date of execution. As of November 20, 2024,
approximately 71% of the Company’s total debt is fixed at an
average SOFR rate of 3.9% through February 2026.
Ms. Noel M. Geoffroy, Helen of Troy Chief Executive Officer,
stated: “We could not be more excited to add Olive & June to
our portfolio of leading brands and we welcome its passionate
associates and visionary leadership team to the Helen of Troy
family. We believe Olive & June is an excellent fit with Helen
of Troy both strategically and financially. Olive & June’s
innovation-driven performance, highly relevant vision of
democratizing nail care for everyone, award-winning products and
unique consumer engagement model are impressive and inspiring. We
see significant opportunities to build on its strengths in consumer
obsession and breakthrough commercial and product innovation, in
addition to helping expand the brand’s availability with increased
distribution. Olive & June complements our existing Beauty
portfolio and broadens us beyond the Hair category, adding a
consumables business that is both high growth and high margin. We
look forward to working together to fully realize the potential of
Olive & June.”
Ms. Sarah Gibson Tuttle, founder and CEO of Olive & June,
said: “When I started Olive & June, the mission was simple: to
make salon-quality nails accessible to everyone, everywhere. Thanks
to our passionate team and loyal community, we have achieved
incredible milestones—teaching millions how to do their nails at
home and redefining what is possible in Beauty. Now, as we join the
Helen of Troy family, a company known for elevating everyday
experiences with innovative consumer products, I could not be more
thrilled to lead this next chapter of growth for the brand. I have
been deeply impressed by Noel’s visionary leadership and look
forward to partnering with her and the entire Helen of Troy team.
Together, we will continue to innovate, inspire, and deliver on our
promise to be the go-to at-home nail solution for everyone,
everywhere. I cannot wait to see all that we will accomplish
together.”
The acquisition is expected to close before calendar year end
2024, subject to customary closing conditions, including regulatory
approvals.
Conference Call and
Webcast
The Company will conduct a teleconference tomorrow in
conjunction with today's announcement. The teleconference begins at
8:30 a.m. Eastern Time Friday, November 22, 2024. Institutional
investors and analysts interested in participating in the call are
invited to dial (877) 407-3982 approximately ten minutes prior to
the start of the call. The conference call will also be webcast
live on the Events & Presentations page at:
http://investor.helenoftroy.com/. A telephone replay of this call
will be available at 12:15 p.m. Eastern Time on November 22, 2024,
until 11:59 p.m. Eastern Time on December 6, 2024, and can be
accessed by dialing (844) 512-2921 and entering replay pin number
13750284. A replay of the webcast will remain available on the
website for one year.
Non-GAAP Financial
Measures
The Company reports and discusses its operating results using
financial measures consistent with accounting principles generally
accepted in the United States of America (“GAAP”). To supplement
its presentation, the Company discloses certain financial measures
that may be considered non-GAAP such as EBITDA, adjusted EBITDA,
adjusted EBITDA margin, adjusted diluted EPS, free cash flow
conversion, and pro forma net leverage ratio. The Company is unable
to present quantitative reconciliations of its forward-looking pro
forma net leverage ratio and Olive & June’s forward-looking
adjusted EBITDA to their most directly comparable forward-looking
GAAP financial measures because such information is not available,
and management cannot reliably predict all of the necessary
components of such GAAP financial measures without unreasonable
effort or expense. In addition, the Company believes such
reconciliations would imply a degree of precision that would be
confusing or misleading to investors.
Certain Defined Terms
(1)
Adjusted Diluted EPS is defined
as net income as reported under GAAP excluding the following items
net of their applicable tax effects: acquisition-related expenses,
Barbados tax reform, restructuring charges, amortization of
intangible assets, and non-cash share-based compensation, as
applicable, divided by the weighted average shares of common stock
outstanding plus the effect of dilutive securities.
(2)
Adjusted EBITDA is defined as
earnings before interest, taxes, depreciation, amortization,
acquisition-related expenses, restructuring charges, and non-cash
share-based compensation.
(3)
Adjusted EBITDA margin is defined
as adjusted EBITDA divided by net sales revenue.
(4)
Free Cash Flow Conversion is
defined as net cash provided by operating activities less capital
and intangible asset expenditures divided by EBITDA
(5)
Pro forma net leverage ratio is
defined as the estimated net debt at the end of fiscal 2025 after
giving effect to the acquisition, divided by Helen of Troy’s
estimated fiscal 2025 pre-acquisition adjusted EBITDA plus the
estimated pro forma adjusted EBITDA of the acquisition for the
equivalent time period post-closing, as defined by Helen of Troy’s
applicable debt covenants.
About Helen of Troy
Limited
Helen of Troy Limited (NASDAQ: HELE) is a leading global
consumer products company offering creative products and solutions
for its customers through a diversified portfolio of
well-recognized and widely-trusted brands, including OXO, Hydro
Flask, Osprey, Vicks, Braun, Honeywell, PUR, Hot Tools, Drybar,
Curlsmith, and Revlon. All trademarks herein belong to Helen of
Troy Limited (or its subsidiaries) and/or are used under license
from their respective licensors.
For more information about Helen of Troy, please visit
http://investor.helenoftroy.com
Forward-Looking
Statements
Certain written and oral statements made by the Company and
subsidiaries of the Company may constitute “forward-looking
statements” as defined under the Private Securities Litigation
Reform Act of 1995. This includes statements made in this press
release, in other filings with the SEC, and in certain other oral
and written presentations. Generally, the words “anticipates”,
“assumes”, “believes”, “expects”, “plans”, “may”, “will”, “might”,
“would”, “should”, “seeks”, “estimates”, “project”, “predict”,
“potential”, “currently”, “continue”, “intends”, “outlook”,
“forecasts”, “targets”, “reflects”, “could”, and other similar
words identify forward-looking statements. All statements that
address operating results, events or developments that the Company
expects or anticipates may occur in the future, including
statements related to sales, expenses, EPS results, and statements
expressing general expectations about future operating results, are
forward-looking statements and are based upon its current
expectations and various assumptions. The Company believes there is
a reasonable basis for these expectations and assumptions, but
there can be no assurance that the Company will realize these
expectations or that these assumptions will prove correct.
Forward-looking statements are only as of the date they are made
and are subject to risks that could cause them to differ materially
from actual results. Accordingly, the Company cautions readers not
to place undue reliance on forward-looking statements. The
forward-looking statements contained in this press release should
be read in conjunction with, and are subject to and qualified by,
the risks described in the Company's Form 10-K for the year ended
February 29, 2024, and in the Company's other filings with the SEC.
Investors are urged to refer to the risk factors referred to above
for a description of these risks. Such risks include, among others,
the geographic concentration of certain United States (“U.S.”)
distribution facilities which increases its risk to disruptions
that could affect the Company's ability to deliver products in a
timely manner, the occurrence of cyber incidents or failure by the
Company or its third-party service providers to maintain
cybersecurity and the integrity of confidential internal or
customer data, a cybersecurity breach, obsolescence or
interruptions in the operation of the Company's central global
Enterprise Resource Planning systems and other peripheral
information systems, the Company's ability to develop and introduce
a continuing stream of innovative new products to meet changing
consumer preferences, actions taken by large customers that may
adversely affect the Company's gross profit and operating results,
the Company's dependence on sales to several large customers and
the risks associated with any loss of, or substantial decline in,
sales to top customers, the Company's dependence on third-party
manufacturers, most of which are located in Asia, and any inability
to obtain products from such manufacturers, the Company's ability
to deliver products to its customers in a timely manner and
according to their fulfillment standards, the risks associated with
trade barriers, exchange controls, expropriations, and other risks
associated with domestic and foreign operations including
uncertainty and business interruptions resulting from political
changes and events in the U.S. and abroad, and volatility in the
global credit and financial markets and economy, the Company's
dependence on the strength of retail economies and vulnerabilities
to any prolonged economic downturn, including a downturn from the
effects of macroeconomic conditions, any public health crises or
similar conditions, risks associated with weather conditions, the
duration and severity of the cold and flu season and other related
factors, the Company's reliance on its Chief Executive Officer and
a limited number of other key senior officers to operate its
business, risks associated with the use of licensed trademarks from
or to third parties, the Company's ability to execute and realize
expected synergies from strategic business initiatives such as
acquisitions, divestitures and global restructuring plans,
including Project Pegasus, the risks of potential changes in laws
and regulations, including environmental, employment and health and
safety and tax laws, and the costs and complexities of compliance
with such laws, the risks associated with increased focus and
expectations on climate change and other environmental, social and
governance matters, the risks associated with significant changes
in or the Company's compliance with regulations, interpretations or
product certification requirements, the risks associated with
global legal developments regarding privacy and data security that
could result in changes to its business practices, penalties,
increased cost of operations, or otherwise harm the business, the
risks of significant tariffs or other restrictions being placed on
imports from China, Mexico or Vietnam or any retaliatory trade
measures taken by China, Mexico or Vietnam, the Company's
dependence on whether it is classified as a “controlled foreign
corporation” for U.S. federal income tax purposes which impacts the
tax treatment of its non-U.S. income, the risks associated with
legislation enacted in Bermuda and Barbados in response to the
European Union's review of harmful tax competition, the risks
associated with accounting for tax positions and the resolution of
tax disputes, the risks associated with product recalls, product
liability and other claims against the Company, and associated
financial risks including but not limited to, increased costs of
raw materials, energy and transportation, significant impairment of
the Company's goodwill, indefinite-lived and definite-lived
intangible assets or other long-lived assets, risks associated with
foreign currency exchange rate fluctuations, the risks to the
Company's liquidity or cost of capital which may be materially
adversely affected by constraints or changes in the capital and
credit markets, interest rates and limitations under its financing
arrangements, and projections of product demand, sales and net
income, which are highly subjective in nature, and from which
future sales and net income could vary by a material amount. The
Company undertakes no obligation to publicly update or revise any
forward-looking statements as a result of new information, future
events or otherwise.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241121147449/en/
Investor Contact: Helen of Troy Limited Anne Rakunas, Director,
External Communications (915) 225-4841 ICR, Inc. Allison Malkin,
Partner (203) 682-8200
Grafico Azioni Helen of Troy (NASDAQ:HELE)
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