Q4 2020 Earnings Call

Greetings and welcome to the Helen of Troy Limited fourth quarter, two 2020 earnings call.

Simon participants will be in listen only mode.

A brief question answer session will follow the formal presentation.

If anyone takes your car operator assistance during the conference. Please press Star Zero from your telephone Keypad. Please note. This conference is being recorded.

At this time I'll turn the conference over to check Jason Senior Vice President corporate business development, Sir you may begin.

Thank you operator, good afternoon, everyone and welcome to Helen of Troys fourth quarter in fiscal 2020, <unk> earnings Conference call.

Today, each member of our earnings team is in their homes and in different locations across the United States.

Since this is the first time, we are conducting our earnings call remotely. We hope you will pardon any technical glitches.

Before discussing today's agenda.

I'd like to call your attention to a change in how we define our sales.

As detailed in this afternoons earnings release, we now define core strategic business that we expect to be an ongoing part of our operations and noncore as business that we expected it best within a year of each designation as noncore.

Previously referred to as core business organic business now refers to net sales revenue associated with product lines or brands. After the first 12 months from the date the product line or brand, which was acquired.

Excluding the impact that foreign currency Remeasurement had in our reported net sales.

The agenda for the call. This afternoon is as follows I'll begin with a brief discussion of forward looking statements.

Mr. Julien Mininberg the company CEO will comment on the financial performance of the quarter in year. Our response to the cold crisis and discuss current business trends, then mr., Brian grass. The company CFO will review the financials in more detail and reflect on considerations from the cobot.

<unk> and Nick uncertainty as we enter fiscal year 21.

Following this we will open up the called the take your questions.

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 in other words similar.

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.

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 Mr. Mininberg.

I'd like to note that a copy of todays earnings release has been posted to the Investor Relations section of our website at Www Dot Helen of Troy Dot Com.

Earnings release contains tables that reconcile non-GAAP financial measures to their corresponding GAAP based measures.

There were these can be obtained by selecting the investor Relations tab on the company's home page and then the news tab.

I'll now turn the conference call over to Mr. Mininberg.

Thanks, Jack Good afternoon, everyone and thanks for joining us on behalf of Helen of Troy I would like to share my heartfelt hope that you your families and loved ones are staying safe and healthy during this extraordinary time.

As we all know gold at 19 has brought unprecedented disruptions to the global community, which in turn is experiencing an unparalleled impact on economic activity across most sectors in all geographies.

The situation is so dynamic that each day brings new developments.

Response, we are rapidly continually adapting our business and leading into categories, where our leadership brands play a vital role right now such as VIX Braun fewer and parts of Honeywell and also.

We've also taken major steps to protect our people increase our liquidity temporarily reduce our costs and safely continue our operations. We have done all of this guided by our values with a focus on preserving the outstanding capabilities and systems, we have built during our transformation.

We came into the crisis with momentum and believe our actions have positioned us to serve all of our four major stakeholder groups, our associates consumers customers and shareholders.

We will give the tail in each of these areas during today's call.

In a highly unpredictable nature of the cobot 19 situation, we will not be providing guidance for fiscal 21 at this time.

Well, we're taking actions every day to work through the current prices remain focused on our phase two plans and financial targets.

With such a broad range of topics to discuss my comments will first give perspective on our excellent fourth quarter and full year results.

Hey, Mark in outstanding conclusion to the first your base to transformation.

Next I will discuss our response to cope with 19, and how we are positioning Helen of Troy to navigate the current prices.

Finally, I will share a recent trends we are now observing related to our business as the crisis evolve.

Brian will then share a deeper view into our financials, including more insight on the business environment as we move forward.

Now I would like to turn to our performance in the fourth quarter fiscal <unk>.

We finished the quarter well ahead of our expectations net sales grew 14.9% with organic business growth of 13.4%.

Sales growth was double digit in each of our three business units leadership brands led the way rowing, 15.7% during the quarter.

The online channel continues to be a major growth driver up approximately 39% year over year contributing 24% of total fourth quarter sales.

Customer replenishment continued to be healthy following the strong sell through our products during the holiday season.

Currently late in the fourth quarter monitor demand further increases go get 90 began spreading across the globe.

Turning to the full year across nearly every key measure fiscal 20 was the strongest result in Helen of Troys history.

Grupo total organic net sales, though and organic net sales 9.2%.

We are delighted to deliver that acceleration on top of the 5.8% total net sales growth in each of our last two fiscal years.

Ticket really in light of tariff related disruptions unfavorable foreign currency exchange and the operational challenges from three consecutive years of significant organic growth.

Leadership brands grew 9.4% in fiscal 2000 and accounted for approximately 80% of overall sales.

So the eight leadership brands group for the year.

Our digital initiatives continued to generate result, with online sale up over 34% during the fiscal year to represent 24% of total sales.

Adjusted operating margin expanded 50 basis points in a year when we raised our growth investments to the next level.

Adjusted diluted EPS grew 15.4% meaningful acceleration on top of the 11.3% growth in fiscal 19, and 11.6% growth in physical 80.

Operating cash flow grew over 35% year over year, demonstrating the strength of our flywheel and helping us maintain strong liquidity and low leverage even after the drive our acquisition.

On a strategic level, our multiyear growth investments in leadership brands digital marketing E Commerce consumer centric innovation global shared services have added flywheel momentum.

We're proud to share that last month, our two houseware leadership brands were recognized by the NPV group during their seventh annual home industry performance Awards for calendar year 2019.

I took last was recognized for delivering the largest dollar share increase in the portable beverage category.

So when the award for the largest dollar share increase.

In food storage and also also earned Npvs New award as the brands delivering the largest overall market share increase in the total U.S. housewares industry.

This is the third consecutive year, which oxos market share gains have been honored by MPT.

I would like turned out to our business segments during the fourth quarter and full fiscal year.

I'll begin with beauty with delivered an outstanding quarter and best year of sales broken at least a decade.

Beauty sales increased 23.1% in the fourth quarter, well above our expectations.

Included approximately five weeks of Drybar sales.

UTI organic revenue growth was 16.1% also ahead of our expectations representing its fifth consecutive broke war.

For the full fiscal 2000 total beauty sales increased 10.4%, including Drybar very strong.

For beauty appliances fiscal 20 marks the third consecutive year of broke room at momentum, resulting in substantial market share gains.

Over the past three years the improvement to our beauty segment has accelerated under new leadership.

Significantly more focus on developing the online channel digital marketing new products based on deep consumer insights for the retail and also the professional markets and further improvements to the caliber of our organization well paid off.

Similar efforts were also made internationally beauty over the past two years, especially India, leading to grow and greatly improved profitability in Europe.

During fiscal 2008, we increased investment in digital marketing to support new clients innovation in both brick and mortar and online.

These efforts along with highly innovative new products outgrow the overall appliance category itself.

Welcome turned around from a shrinking trend in recent years.

Syndicated data shows that during the latest 52 week period, Helen of Troy Burger grew its number one share position in arm in the online channel for U.S. hair care appliances, and now holds a significantly.

Indicated they didnt brick and mortar show that during the latest 52 week period, we grew our number two domestic share position in U.S. retail appliances.

First mover innovations such as the creation of the Volumizer category of appliances continues to be a major driver and are a key focus area for us going forward.

The Revlon and hot tools, one step Volumizer innovation I've heard more than 40000 consumer reviews with ratings of 4.4 stars are not depending on the side.

We're extremely proud of this accomplishment grant to build on our success with new product offerings later in fiscal 21 and incorporate further consumer centric insights across our beauty appliance portfolio, including Drybulk.

In housewares exactly capped an outstanding year by delivering an impressive fourth quarter with net sales up 15% also topping our expectations. How squirt grew a remarkable 22.4% for the full fiscal year against a very tough year ago.

Well OXXO and hydro flask finished strong both posted healthy growth for the full year.

Our investments in innovation, new distribution marketing and E commerce are paying all with customers and consumers online and in brick and mortar.

Providing solid ROI and growing our market shares.

Oxos unique and enduring excellence and Universal design and clearly defines positioning influence is all touch points across the consumer journey.

Actually it was all about better performance through better design quality that make everyday better.

The two new NPD awards for OXXO mentioned earlier confirm what you're seeing in Arkansas, a customer Pos data Oxos overall excellence and meticulously plan stream of consumer centric innovation resonate with consumers and win in the marketplace.

I could black is had simply fantastic fiscal 2000.

Its distribution continue to expand as did itself, resulting in high double digit growth for the quarter after year.

According to third party syndicated data to 52 week period, ending in February Hypercloud added incremental market share gains to further expand its position as the number one player in the U.S. metal beverage Baltimore.

During the quarter, we continue to grow the brand international domestically, we began to see high volume customers strategically expand OXXO show I prefer that shelf space to meet growing consumer demand.

In February we began shipping our 2020 spring collection, the new product lineup includes a variety of innovations such as the new trails series, which is 25% lighter with no reduction in thermal performance, new colors, and a new finished texture.

Spring collection also further expands hydro flask beyond the bottle with new lunch boxes impacts.

Just one more strategy for hydro flask continues to produce results in the quarter with loyal customers to consumers, adding new sizes colors cap and accessories to their collection.

Looking ahead, we expect hydro flask to continue benefiting from multiple long term growth drivers. These include further expanding distribution and shelf space.

Just one more okay, maybe just two more among households that have already discovered hydro flask.

New innovation in existing categories, new entries Bianca bottle.

Further growth and expansion internationally.

More direct to consumer collegiate and much more customization, Matt we think hydro flask has a wide array of white space opportunities.

Turning to help in home, our largest and most global business, we're focusing on delighting consumers with trusted solutions for healthy living in peace of mind.

Especially when they need us most hope it has excellent fourth quarter results were ahead of our expectations net sales up 10.5%.

Sales in several of our health at home categories are highly correlated to the severity of winter weather and cough cold and flu incidents that has generally more concentrated in our fourth quarter.

For the recent 2019 2020 season fall and winter weather was milder than historical averages and the incidence of cough cold and flu symptoms was only slightly greater than last year's below average season.

Mediatheque fever was the one symptom area, where we did see higher.

Additionally, and separately the spread of corporate 2019 during the month of February through Asia, Europe and into the U.S. added to help at home sales and Thermometry Humidifiers Inhalants, an air Purifiers.

Now turning to our response to covert 90 <unk>.

We came into the crisis very healthy.

We have strong business results, a trusted and diversified portfolio leadership brands with significant market positions.

Exceptional people United by a powerful culture.

Highly capable global systems under our shared services and a proven ability to stay nimble.

As the crisis unfolds, we acted quickly and decisively to protect our people would reduce our costs doing so in a way that focuses on protecting the capabilities built during our transformation.

On the product side. He response area for US has been to provide essential health products that consumers need now.

The monitors under our VIX and Braun brands, Humidifiers, and inhalants under the VIX brand and air and water purifiers under our Honeywell and fewer ramps.

All these are critical at this time are highly trusted and are in high demand.

We are working 24, seven to maximize supply and support customers and consumers.

Outside of the health Arena with families nothing at home spending more time in the kitchen and more focused on cleaning on storage as they pass reload.

Our largest leadership Rad OXXO is also seeing elevated demand online and in those brick and mortars doors that remain open.

We have adapted our shipments in marketing focus to meet the major shifts towards online shopping is key retailers temporarily closed major portions of their brick and mortar footprints.

Our response to the area protecting our people have been comprehensive and proactive from the start.

By a task force and senior leaders coordinating across all of our global sites.

Measures include the work from home policy, social distancing in our distribution centers frequented elevated cleaning protocols across all sites and locked down on nearly all business travel.

Such a dynamic situation, we will continue to adapt quickly to changes.

Cost interventions fall into two major categories personnel cost reductions and significant delays in our fiscal 21 discretionary spending.

Most became affective earlier this month.

We're treating the reductions like light switches that we are dealing or turning off now and by preserving our underlying infrastructure of people and systems. We can turn them back on justice quickly and with minimal disruption when business conditions warrant.

We greatly prefer this approach to permanent layoffs or reductions.

It preserves our ability to run the business now as well as the speed with which we can respond to the environment changes.

On the personnel side, we have temporarily reduce salaries and wages across almost all parts of the company effective April six.

While this was a very difficult decision to make we chose this approach versus widespread layoffs in order to retain talent protect what we have built and preserve as many jobs as possible.

Hiring freeze suspension of merit increases and promotions and other personnel measures have also been implemented.

This approach of shared sacrifice, reaching all levels of the organization is highly consistent with our culture.

Our people supported this approach and continue to do exactly exemplary work driving the business and keeping the company fully operational I.

I am proud, but not all surprised that they are doing so the passion dedication and the ownership mindset that is the signature all Helen of Troy people all around the world.

And our distribution centers, we are reducing our external temporary labor and furloughing. Some full time employees to match the man.

For Furloughed associates covered under the company's health insurance plans Helen of Troys pay both the employee portion and the company portion of the premiums. So they can maintain their coverage during to help prices.

Our second category of temporary measures focuses on reductions and delays to discretionary spending such as branded product span travel and certain capital expenditures, our fiscal 21 budget earmarked several substantial incremental investments in our leadership brands I think he phase two strategic initiatives.

We believe we are making the right short term business choices to delay some of these investments until later this year and some will likely now fall into fiscal 22.

The largest bucket for discretionary spending is marketing expense for our leadership brands. So we have also taken action on this front.

We are adapting our spend to match consumer demand and our supply.

For some initiatives spending has been reduced well for others, a meaningful portion will be delayed until we have better visibility on demand and recovery.

We are those brands that are extremely relevant right now we will continue this bad.

In all cases, however to keep the pump prime for the recovery period, we will make appropriate but reduced investments needed to help our brands they top of mind.

We continue to choice fully invested new product development.

We're centric innovation is the lifeblood of our leadership brands you.

Innovation keeps them differentiated and as a core strategy in our transformation.

Launches, we're working on now will be key building blocks in the recovery period in fiscal 2002 and beyond.

I'd now like to turn to the third and final area of my prepared remarks, I, reflecting on some current trends related to the cobot 19 pandemic that we're seeing during our fourth.

First quarter and thoughts on the future as we navigate the crisis and plan for growth on the other side.

One key trend area already mentioned is the greatly increased need for health related products and awareness of their importance in People's lives.

With the current intensive media focus on help.

All generations are getting a rapid fire education on the importance of owning the types of products, we sell under the Braun VIX and Honeywell brands. As an example households are reminded that they should have a high quality thermometer.

On your thermometers compliance in demand for pro covers is way up its users look to ensure accuracy and hygiene and reduce the risk of contagion.

Businesses are increasingly focusing on monitoring the temperature of their employees to help keep them safe and their sites operational.

Inhalants, such as big staple pads and cost suppressing inhalants like Vicks vaposteam are increasing demand as consumers take care of their family.

Also in high demand and getting additional media attention are highly rated and market, leading humidifiers such as from our VIX and Honeywell models.

Demand is also up for our air Purifiers, including our highly rated market, leading Honeywell models, which help improve indoor air quality.

The strong sales in the fourth quarter and supply constrained from who had related factory shutdowns in China. We are working very hard to maximize production and delivery from our factory partners in China, Mexico, and the United States.

Another key trended wellness people are looking to protect themselves and their families through hygiene and cleanliness and they spend more time at home and more time with families together.

Water purifiers like viewers picture and faucet mounts play an increasing role as do their replacement filters that are certified to reduce a wide range of contaminants demand is up for both.

Especially as water in single use plastic bottles remains increasingly undesirable not available.

With cleaning top of mind to help protect the wellness and family leading product from Oxford, overseeing elevated demand online and its doors that remain open.

Third trended the necessity of keeping more food at home Central's on hand, and cooking more at home families are discovering and rediscovering enjoy that comes from cooking and baking together, especially with kids older Young in the House 24 Center.

Several core categories of OXXO products or see elevated demands online and in stores that are open, particularly in food prep baking home organization and storage containers.

And the fourth trend. We're seeing is the continued consumer interest in our highly popular beauty volumizer appliance franchises.

Demand online in the stores that are open is higher than our supply.

The steps, we're taking to ramp up to full capacity at our key suppliers and add new ones are helping which will in turn allow us to meet much more of the demand and position us to be more fully in stock now and also post crisis.

As we look to the future we're fortunate to have a seasoned leadership team and a capable infrastructure.

Well this is not the first crisis many of our leaders running Helen of Troy work through it is our first pandemic of this magnitude.

We believe instead of carefully considered actions we've taken to bring the companies with the crisis will make a substantial difference in protecting our cash our business our people and our high performing organization. We will continue to adapt quickly as the situation evolved.

Once the economy return to some level of normalcy, we expect to lean back into all parts of our flywheel, including the key initiatives for the second year for phase two of our transformation.

Examples on the shared service side include further geographic diversification of our supply chain and upgrading our I T capabilities to match our group.

Meanwhile, we remain focused on other key aspects of our strategic plan such as continuing to invest in our leadership brands.

For example was on the OXXO brand OXXO recently entered into a partnership with 1% for the planet an organization that champions environmental awareness in action, enabling brands to give back to a global network of nonprofits the champion environmentally responsible initiatives.

Actually spent 30 years, making high quality product that last engineered for functionality and durability.

Why we guarantee our tools for light.

Proximately, 90% of the impact of product will have on the environment is decided in the design process OXXO core competency in design and engineering makes us uniquely qualified to develop tomorrow tools, which will continue to be thoughtfully designed lens of environmental responsibility.

Oxos partnership with 1% is a perfect fit for the brand in parallel to rapidly growing interest in all of our stakeholders have environmental and social responsibility.

Another key examples the drive our integration, which remains on track and is a very positive reflection on the high level of collaboration across all departments and to drive our team.

That team is now rapidly becoming a fully integrated part of Helen of Troy.

We are proud to nearly all of the drive our people we asked to join US in January excepted, our offer and are hard at work on the brand.

In conclusion, while things are difficult right now we believe tomorrow can be improved by successfully managing the challenges we are all facing today.

I remain optimistic that we're making the right choices for our associates consumers customers and shareholders. While much uncertainty remains the current prices will eventually path and the new normal will emerge we entered the crisis with strength and momentum we see plenty of reason to believe that Helen of Troy will raise the crisis, where.

We're confident that we will come out stronger than the other side.

Before turning the call over to Brian I would like to share that builds the CECA a director serving on our board since 2009 announced his intention to retire at the end of his term in August.

Over the past decade, Bill provided the company with a wealth of global consumer products industry knowledge and the leadership experience from his very successful 30 years in marketing and senior management for Carol Avon and later at the LPG a.

The rest of the board and I are thankful and great book to Bill for his service to Helen of Troy.

His grace exemplary character consumer mindset and counsel have been instrumental part of our success. We wish him the very best with that I will now turn the call over to Brian.

Thank you Julien good afternoon, everyone and thank you for joining us I'd like to Echo Juliens comment some pass along my sincere wishes for the health and safety. If you your families and your colleagues.

The health and safety of our associates has been our greatest consideration since cobot 19 began and it will continue to be as we move forward.

As humbling as it has been.

I've never been more proud of the company in the spirit of togetherness within it.

I want to start by reiterating that the fundamentals of Helen of Troys businesses remained strong.

Even though the current operating environment has presented its share of challenges and uncertainty or view over the longer term opportunities. We see it had to further grow our business has not changed nor has our view of the key strategies, we have chosen in pursuing them.

With our prudent diversified business model and product portfolio efficient scalable operating platform strong balance sheet and ample liquidity I believe we're well positioned to actively manage the things in our control and successfully navigate the current crisis and a protracted economic downturn attached.

That occur.

Before discussing the quarter in more detail I'd like to make a couple of broad points.

First consistent with our strategy of focusing on our leadership brands during the fourth quarter fiscal 2020, we committed to a plan to divest certain assets within our mass market personal care business and recorded an after tax non cash impairment charge for 36.4 million related to its goodwill and intangible assets.

Yes, that's to be divested, including tangible assets inventory and fixed assets related to the company's mass channel liquids powder and aerosol products under brands, such as FERC Brut sure and its UGI.

We expect the divestiture to occur within fiscal 21.

Accordingly, we have classified the identified assets as held for sale.

In conjunction with this change we now to find core as strategic business that we expect to be an ongoing part of our operations noncore as business that we expected the best put into Europe designation as noncore.

Previously referred to as core business organic business now refers to net sales revenue associated with product line for brands. After the first 12 months from the date the product line or brands acquired excluding the impact foreign currency Remeasurement had on reported net sales.

Today's earnings release contains tables that show core and non core revenue by segment for the fourth quarter and fiscal years into 2020 and 29 key.

We've also included fables that present consolidated core and non core revenue and adjusted EPS for fiscal 2020, 2019 and 2018.

Finally, our upcoming Investor presentation will include 40 years of consolidated core and non core revenue and adjusted EPS.

Second as we note noted in today's earnings release, we're deferring providing our outlook for the current fiscal year due to the rapidly evolving cobot 19 pandemic into related business uncertainty.

We expect to return to our historic practice of providing annual outlook once visibility improves.

Now I'll turn to a discussion of our fourth quarter results. We achieved strong results in the fourth quarter with adjusted diluted EPS growth above our expectations largely due to stronger than expected net sales in all segments in particular beauty.

We made the growth investments, we referred to on our third quarter beliefs.

Got to lean and even further behind the strength the fourth quarter.

This resulted in compressed margins for the quarter, but still allowed us to allow for adjusted EPS that was ahead of our expectations and even more support behind her leadership brands.

Another example of the value creation fly will work.

Consolidated sales revenue was 442.4 million a 14.9% increase over the prior year driven by double digit organic growth in all three business segments and five weeks of contribution from driver.

Consolidated sales in the online channel grew approximately 39% year over year to comprise approximately 24% of our consolidated net sales in the fourth quarter.

Sales from our leadership brands grew 15.7% in the quarter, which includes 1.8 percentage points of growth from dry bar.

This was another great quarter for Houseware segment, which posted organic business increased to 15% on top of 8.1% organic business growth in the same period last year.

Second saw robust demand for both OXXO and hydro flask brands, both online and in store.

Health and home organic business increased 10.8%, primarily due to new product introductions and increased demand, particularly in for monitory due to higher pediatric fever, and the impact of cobot 19 toward the end of the fourth quarter.

These factors were partially offset by lower sales due to net distribution changes year over year.

UTI organic business increased 16.1%, primarily due to growth in both online and brick and mortar in the appliance category, partially offset by a decline in personal care.

Our country contributed net sales of 6 million were 6.7 percentage points beauty sales growth, resulting in total segment growth of 23.1%.

Consolidated gross profit margin with 43.5% compared to 40.9%.

The 2.6 percentage point increase is primarily due to a more favorable product mix within all three business segments and the lower mix of shipments made on a direct import basis.

These factors were partially offset by lower mix the personal care sales in the beauty segment.

Consolidated SGN eight was 34.4% of net sales compared to 29.2%.

5.2 percentage point increase is primarily due to higher advertising and new product development expense higher royalty expense, an increase in amortization expense and higher annual incentive compensation expense.

These factors were offset by lower share based compensation.

As mentioned on our third quarter call, we're shifting advertising and new product development extends from the third to the fourth quarter and we were able to lean into spending even further than originally planned during the quarter.

Year over year, increasing advertising spending increased are asking a ratio by approximately 2.9 percentage points, while still allowing us to exceed our full year adjusted EPS expectations.

We believe the investments made in the fourth quarter will benefit our businesses and keep our brands resonating with consumers, both short and long term.

GAAP operating loss was $2.7 million were minus 8.6% of net sales in included non cash impairment charges 41 million.

This compares to operating income of 44.1 million or 11.5% of net sales the same period last year.

On an adjusted basis consolidated operating margin was 12.2% compared to 13.9% in the same period last year.

1.7 percentage point decrease primarily reflects higher advertising and new product development expense higher annual incentive compensation expense.

And an increase in royalty expense.

These factors were partially offset by a more favorable product mix and increased operating leverage from sales growth.

Turning to segment performance.

Elsewhere as adjusted operating margin decreased 6.3 percentage points to 11.8%.

Primarily reflecting higher advertising and new product development expense to support strategic initiatives into higher and higher freight and distribution expense to support retail customer shipments.

These factors were partially offset by the impact of a more favorable product mix increased operating leverage from sales growth.

Health and home adjusted operating margin decreased 1.4 percentage points to 11.2%.

Primarily reflecting higher royalty expense and higher new product development.

These factors were partially offset by the margin impact of a more favorable product mix increased operating leverage from sales growth.

UTI adjusted operating margin increased four percentage points to 14.4% primarily due to the margin impact of a more favorable product mix increased operating leverage from sales growth and lower freight expense, partially offset by an increasing advertising at new product development.

Income tax benefit as percentage of pre tax loss was 48.1% compared to income tax expense as a percentage of pretax income of 7.9% for the same period last year.

Year over year change is primarily due to the recognition of the tax benefit from the impairment charges recorded in the fourth quarter fiscal 20.

Loss from continuing operations was 3.2 million or 13 cents per diluted share compared to income from continuing operations, a 37.7 million or $1.47 per diluted share in the prior year.

Non-GAAP adjusted income from continuing operations grew to 47.8 million were $1.88 per diluted share compared to 46.6 million were $1.82 per diluted share.

This represents a 3.3% increasing adjusted diluted EPS, which reflects higher adjusted operating income and the impact of lower weighted average shares outstanding partially offset by higher interest expense.

Despite the lower growth in the fourth quarter adjusted diluted EPS growth in the second half of fiscal 20 was 18.4% compared to 11.7% in the first half.

Looking at fiscal 20, as a whole we over delivered against our full year outlook, while making greater investments in the short and long term health of our businesses.

We delivered sales growth of 9.2% expanded our adjusted operating margin by 50 basis points grew adjusted EPS by 15.4% in grew free cash flow by 45.6%.

I consider to be the best year, and my 14 years of the company.

Now moving onto our financial position for fiscal 2020 compared to fiscal 2019.

Accounts receivable turnover was 67 days compared to 68.3 days for the same period last year.

Accounts receivable balance was 348 million compared to 280.3 million at the end of fiscal 2019.

Inventory turnover was three times compared to 3.3 times in fiscal 2019.

Inventory was 256.3 million compared to 302.39.

The decline in inventory, primarily reflects strong demand for hydro flask volumizer products as well as strong demand for health and home products driven by Cobot 19 at the end of the fourth quarter.

Net cash provided by operating activities from continuing operations increased 35.3% to 271.3 million for fiscal 2020.

The increase was primarily driven by higher cash earnings in a decrease in cash used for inventory.

These factors were partially offset by an increase in cash used for receivables.

Total short and long term debt was 339.3 million compared to 320.8 million.

Leverage ratio was approximately 1.2 times the into fiscal 2020.

This compares to approximately 1.3 times at the end of fiscal 2019.

Free cash flow growth in fiscal 2008 allowed us to keep our debt leverage it very comfortable level, even with the acquisition of dry bar in January.

Well, we're not providing a formal outlook for fiscal 21, I do want to share with you how we're thinking about our business in the current environment.

And some early trends we're seeing.

We are experiencing favorable demand trends for some of our products, while others are being adversely impacted due to retail store closures and consumer uncertainty.

During most of fiscal 20, we had strong momentum in our housewares and beauty segments, which continued into the beginning of fiscal 21.

At the end of the fourth quarter. The company also began to experience increased demand for certain products in health and home segment, particularly in thermometry.

So far this trend has continued into fiscal 21 become more pronounced another product categories, such as Humidification water purification air purification.

Additionally, at the beginning of fiscal 21 company began to experience favorable demand trends for OXXO products as consumers engage in pantry stocking cleaning asking and cooking at home.

Some of you may recall that are also business grew consistently through the great recession, a decade ago.

Products that are more discretionary nature or more dependent on the retail brick and mortar channel are generally experiencing unfavorable sales trends despite strong demand for our products in most of the channels that are still open for business such as online grocery mass in club.

Overall, our revenues being adversely impacted by the effective brick and mortar store closures limited hours of operation lower store traffic simply because the weight, a brick and mortar and retail environment and our business.

We're also experiencing supply chain disruptions with some third third party manufacturers, which were adversely affecting our ability to meet consumer demand in those product categories, where the strong.

As such we expect the net effect to covert 19 will adversely impact our revenue for the first quarter two full fiscal 21.

As part of a comprehensive approach to preserve our cash flow and adjust for cost structure to lower expected revenue. We have implemented a number of measures that will remain in place until there's greater certainty reopening of retail customer door stores and improved consumer demand.

Measures include graduated salary reduction for all associates, including named executive officers than the other members of the company's executive leadership team.

Reduction in the cash compensation at the company's board of directors suspension of Merit increases promotions, new associate hiring until further notice.

The furloughs associates in specific areas directly tied to sales volume with the assistance to those associates to maintain health insurance coverage as well as a reduction of external temporary labor and reduced work hours.

Reduction or up or deferral of marketing expense as we mean into brands with strong current demand and reduced investment in other key brands without sacrificing brand awareness.

Limited production of investment new product development launches in anticipation of more normalized economic activity.

Elimination of travel expense in the short term with a significant reduction plan for the second half of fiscal 21.

And production and consulting fees and capital expenditures for projects that are not critical.

March 24, 2020, we borrowed approximately $200 million under our revolving credit facility as part of our comprehensive cautionary approach to increase our cash position to maximize our financial flexibility in light of the volatility in the global markets, resulting from the cobot 19.

After giving effect to the borrowing the remaining amount available for borrowings under the facility was 536.4 million.

Our cash cash equivalents on hand was approximately 393 million.

As previously announced we entered into an amendment of our credit agreement in March.

The amendment extended the maturity from December 7th 2020 wants March 13 2025.

Further the amendment increased the revolving commitment from 1 billion to 1.25 billion.

The amendment also reduced the interest spread within our pricing grid and made favorable changes to covenants and borrowing limitations, including a new leverage definition that allows for the subtraction of cash cash equivalents calculating our leverage ratio.

As a result of our Cobot 19 response actions strong revenue growth at the end of fiscal 20, lower inventory levels. We've continued to generate strong cash flow growth in March and April and our liquidity has further improved since the pandemic began.

As of yesterday, our pro forma net leverage was 0.9 times.

Have approximately 380 million of cash cash equivalents on hand, we have approximately 605 million of remaining availability under our credit agreement.

Although we expect our free cash flow to take a step back in fiscal 21, as we built healthy inventory levels in the retail environment looks for stability.

We expect our balance sheet liquidity position to remain strong.

In summary, we are humbled by the tragedy of Cobot 19, and its unprecedented impact on our society.

Strong balance sheet ample liquidity diversified product portfolio and scalable operating platform combined with our cobot 19 response actions. The phase two transformation plan lead us to believe we are well positioned to stored the company through the challenges of the current environment. We're prepared for a variety of long term sorry.

The variety of longer term scenarios that could occur.

If you economy were to deteriorate further for protracted period of time, we believe we have the balance sheet strength and liquidity to navigate economic cycle and we could take further actions to reduce spending and preserve cash flow if it became necessary.

If the economy were to improve as we emerge from the crisis. We believe we are poised to capitalize on the investments made in fiscal 20 in those plan for fiscal 21.

Our businesses had strong momentum leading into the crisis. So we expect to continue to feed that momentum as brick and mortar retail stabilizes.

Hi channel thrives in the consumer to just to a new normal.

And with that I'd like to turn it back to the operator for questions.

Thank you.

At this time will not be conducting a question answer session, which led to ask a question today. Please press star one from your telephone keypad.

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Just finishing speaker equipment, it may be necessary to pick up your handset before pressing the star Keith.

One moment, please help me poll for questions.

Thank you first question is coming from the line of Olivia Tong with Bank of America. Please proceed with your question.

Thanks, Good afternoon, everyone as well.

I think further into your visibility on demand across our key.

So in bound to be considering all the volatility across your channels on if you can give us a sense of either performance since corner close no any volatility from.

March to now.

I think also discussed the retail relationships and also how you're going about planning for the next few quarters can then essentially very different scenarios.

And then secondly, what you're doing on advertising to create awareness and Ron picks Honeywell to the extent that she will.

Product to satisfy the demand while also supporting some of the more discretionary businesses.

Gotcha, Yeah, Hi, Olivia Thanks, a bunch of things in there and nice to talk to you.

Sorry, it's a virtual one today, but not become too loud and clear.

In terms of the questions I'm starting with the.

Demand that we're seeing now in our prepared remarks, you heard I hope some some bright spots there's some significant.

Attention to our products first of all starting in health and home and we are seeing a lot of demand in all the categories mentioned and thermometers included in first among them for obvious reasons on covert 19 extends beyond that though into the humidifiers, They inhalants I think cold and.

Cough ACOF, especially.

And in the case of.

The.

Water Purifiers, and importantly, also air Purifiers, OXXO, where other brand specifically you heard the comments that we made and OXXO as it's been holding up, especially well online and the stores that are open the year over year comps are very very good.

Correct ahead of your go I mean, the case a beauty. We're also seeing a bow and it's getting better week by week, especially as the supply situation unfolds.

To see significant demand, especially when the Volumizer franchise and also to see.

A growth week over week, and depending on which store doors like target.

Walmart Amazon or three very large examples in our top five customer group that are experiencing that trend on.

Beauty. So this is good to see I.

In terms of supporting them or we are supporting them, especially where the where the stores are open others are the company's gotten very good online we're far from perfect. But were miles ahead of where we were just a couple of years ago. So we're supporting the dot coms, a very precisely we can advertise on their sites in an Amazon tremendous amounts of support.

In terms of digital digital marketing, where we have product and where where the customers is able to shop. So that's happening.

And in the case of demand in general, where it's where its poor is into places where the stores closed obviously and with brick and mortar still bigger than online in terms of total sales. That's why Brian made the comments of its net I've got some some damage and it I'd just like everybody else, but with Helen of Troy more developed online and pretty much anyone.

Also we are aware of in our industry. We think we are faring better than most and also having those health care products are makes a big difference. So I think there was another question inside your comments I may have missed that one if livia sorry.

No no worries I guess, you know I Wonder I also asking about the divestiture why now because we know it's not their favorite business, but is there something else you're looking to do.

Our desire to create liquidity or something else.

Just trying trying to better understand the timing given what youre multiples are now post.

Okay. Thanks.

Olivia Brian.

I can start maybe then julianne can jump in I just want to address it's not liquidity driven we have made the decision to do this.

Our <unk> well not far before but sometime during the fourth quarter before called the 19.

Had to Ken had begun.

Now, becoming what it is today so no. It wasn't liquidity driven we just feel it's the right time to focus on our leadership brands and we think the asset is better off in somebody else's hands, who can give at the time and attention it deserves.

Yes, my build on that Olivia is what we've seen some a tremendous strains in the leadership brands you heard the numbers. We just reported for the year also the quarter and then over the last three years plus and beauty now.

There are three years and beauty and many quarters in a row, we've demonstrated not only the ability to grow in appliances, but now also the ability to grow the appliances sufficiently to make the whole segment grow get the biggest in a decade that that you heard in the prepared remarks in terms of the personal care as Brian said, yes, it's probably better off in the hands of a company for which that's.

Core those types of mass markets, a personal care products and in our case, it's not only a matter of focus it's just a matter of of where we're having success and where we want to put the next the next dollar and from a liquidity standpoint, it's far from our minds effect is not even on our minds, where we have tremendous amount of liquidity.

Now we have no debt, we have high cash flow coming into the crisis. So it's not like where I'm selling the furniture.

And then in terms of what we do a with the proceeds and all of that.

I quality problems to have at the time comes and at that moment. It will we'll put it to work on something its core and feature for us.

Great. Thanks, and then just lastly, I'm, just a little bit more color around the decision to delay the guidance for fiscal 2001, obviously understand very challenging backdrop, but is it is like can you talk about like what what your biggest smarties. Our agent just the Kobe 19, obviously is a big piece is it recession or there's something specific.

Internally as you look into 2021 that kind of gives you pause.

I understand it's there are many diverging trends.

[music].

It's a it's a great question I'm very glad you asked so that all come here in the in the public call here that the sole reason, we're not giving guidance is cove at 21 uncertainty and I think the vast majority of other companies have done exactly the same.

It's if I can say, that's the right way, but I'll try which is I think it would almost be irresponsible for us to give guidance at this point for the simple reason that not only do we not know from future standpoint, the shape of the pathogen you know what it what it will take that supports it will take but I think anyone who says they do is almost certain the wrong.

I don't want to judge for other people, but I think it would be very hard for a serious company to say, we've got this and we know exactly where it's going and we can see entire next 12 months I don't think anyone can say that with certainty.

And then a case of Helen of Troy, There's no other reason.

Whether it's a V shape, but there'll be a shape and l. shaped U shape and we've heard it all of what we're doing is looking at our business.

And the prospects that we have and making what we think are the best decisions, but there's no. Other reason whatsoever on the subject to guidance, Brian and I know you had a built there.

No I I would just say I mean, knowing when stores retail stores will open in earnest and be open consistently and when a consumer will be in those stores is a huge.

You know.

Kinda gap in invisibility, that's very difficult to give guidance against we're also we were chasing demand in a few areas leading into the crisis and then there was Chinese new year and the crisis on top of that which has put a lot of disruption into the supply chain that we all.

So still have to work through and so you combine since supply disruption from cobot 19, along with low visibility on demand and I think that that points you in the direction of that giving guidance with would be irresponsible is doing answer that.

Okay. Thanks, so much.

Thank you next question turned in line of Bob Labick CJS Securities. Please proceed with your question.

Good afternoon, I bought a great to hear your voices and I hope everyone on the call is doing well in a safe and healthy.

I wanted to start maybe you could talk a little bit about some of the hurdles for some of your brands to shift to almost nearly 100% online.

You know is there enough inventory in the marketplace or you are forced to use air cargo to replenish and maybe specifically talk a little bit about pumps, you mentioned Amazon obviously it and.

Have they I've I've read that they had shifted to not taking on inventory of non essential items, how does that impact or how has that impacted hydro flask or try bar or things like that just give us a little offensive, what's going on with some of the.

No lack of.

Bricks and mortar retail and how you're trying to get supplied at market.

Yeah, you bet Great question, a nice to hear from you probably have been are quite period for a long time. So it's nice to come out and be able to chat a in the case of the shift to online that it is big I think it's important that people know and I think they do that not all brick and mortar is closed in the drug channel. The pharmacy stores are open I didn't mass market channel.

I'll begin with at Walmart.

Target as to the huge examples generally open on not every department and not every place.

Perfect, but that there is a footprint out there and then what comes to online stores that are close like an ultra dot com as an example, but there's so many others a worthy of a bed bath and beyond dot com and on it goes out there there's plenty of of online activity. That's it's surging is multiples of its historical run rates even.

Taking into account the growth so something is growing 25, 30% over year over year to see it doubled.

Its size and then grow on top of that this is what we're talking about so these are big in terms of us supplying those your point about essentials is important originally and it's just like a month ago or maybe even three weeks ago big players like Amazon, where restricting the product assortment to what they would call us.

Central's and they would have literally ever list with the capital eat of whats in and what's not and then over the course of the last two or three weeks the list of essential as has been growing longer and longer.

We and I'm sure other companies, but certainly we have been pretty successful in getting many of our products added to the essential list, including I'd say, probably 90% of hydro flask at this point.

And so you see you see a lot of new skews, how being handled by those players our own DTC web site, So think of OXXO dot com.

Hydro flask dot com et cetera has been very active because consumers are ordering from us directly on the internet and we're fulfilling from our distribution centers without any retailer involved I believe also kept the post office and Fedex and all of that.

Good spirits.

As we ship a lot of that product so that there's enormous activity in this space in our people are really rising to the occasion.

In terms of the amount of demand as Brian said, it's not enough to overcome all the brick and mortar, but as I said before for a company. That's well developed in that case, we don't have to ship that much more onto the online we're already extremely active in the space and from a digital marketing standpoint is it like this question earlier, we're very active on supporting.

The businesses.

To to keep things moving into to make sure we get good ROI and top of mind and all of that.

On the supply side, we're working very very hard to make sure. There's enough product. It's always the skews that are in high demand at the hardest to keep in stock and we are having some problems as Brian called out in those areas with the combination of chasing demand last going into last quarter. The epic result that we just posted today from last quarter.

The Chinese new year covert 19 itself sweeping through the China factory base.

Now ourselves replenishing demand sorry supply as quickly as we can't to feed all of that so hopefully that gives you a similar on the whole cycle.

Hi, Brian you out his commentary.

Yes, sorry, Julianne, Bob It's Brian I know you have thought airfreight, yes, we've done that selectively where it makes sense both from a demand perspective in the cost perspective.

Situations are situation now where it's become very costly to do that so we have to even more choice for when we decide to do it we're not do it but yes. It is something we didnt fourth quarter.

Got it okay, great and then just yeah.

Well I might want to say an certain areas. That's always want to make sure people know that in the health care essentially our standard is is a little different for the air freight will lean into little bit more there just because we appreciate the.

Sensuality and it's it's we still want to be profitable in all through all the right things on the onetime the other hint that people just need the product.

Got it. Okay. Then I just last quick one for me you mentioned the Drybar integration is on track, but can you give us a sense I don't remember if we knew this from before the world seems to have changed so much how much of their sales were online how is their ability to sell online through their own site and through you know other retail side.

Right and then also as it relates to them how are the synergies in manufacturing and from German going or is that impacted in the short term.

Yeah. The second one first not not impacted what we're doing very good progress on on the subject of manufacturing I were bigger by maybe 10 20 times something like this would have to do the math.

On the appliance side, especially <unk>, and then dry bar and get a little bit more ability to leverage our scale and a much broader supplier base, we know that drive our suppliers well and weve been working with them in one of them is a current major supplier to us and we've we've.

And worked with them they are cooperating nicely. So the terms and the scale advantages are going well. The other is one that we know well, but don't work with as much in and we're working now too to improve the overall situation for the benefit of both on the liquid side with the team is fully intact and dry bar and and is.

Very active supply in the liquids.

Back to the first question helped drive our doing in the Dot com and and all of that that people should know a couple of things and we've announced before that the salons themselves, which are all close today represent roughly the 2080 or 20% of the dry bar sales for products. The 80 is primarily split.

Between old to and so for a both of which on a brick and motor side are closed what are booming online and so the drybar sales online for those two opens before are doing extremely well I, but it's not enough to overcome the brick and mortar and in the case of the dry bar.

Our stores, there's an active direct to consumer aspect and that is extremely active right. Now on if you are on their mailing lists for example, you'd see a lot of offers and reminders and good things for home like think try shampoos and you taking care of yourself at a time when wellness matters and people that kits.

Climb in the walls and all that out just to give people a chance to take care of themselves during that time I know Brian's got some built here.

No.

I think you covered all points I would have made.

Okay.

Great all right. Thank you very much.

Sure. Thanks. Thank you. Thank you.

Next question is turned in line of Rupesh Parikh with Oppenheimer. Please proceed with your question.

Good afternoon, and thanks for taking my question I'm. So that's for sure I want to Starwood.

Enjoying a if it's helping home so we got a lot of questions on your thermometer business. So just wanted to get offensive your ability to ramp up capacity and also.

Whether you currently serve the viewed to be channel and whether that's that's an opportunity going forward.

Yeah. It's great question. So some operators are booming in general nobody likes the reason I covert 19, but we don't cause the problem, we're very glad to be a part of the solution.

To the extent that we can be there for people we have production facilities a that we work with these are third parties through China, <unk> and also in Mexico and some parts for example, the pro covers for the infrared thermometers, where the Braun your thermometers the same product.

It is in the United States. So it's not just a China thing right transport thing. This is a capacity thing so on the subject capacity weve been greatly improving the capacity out of Mexico, a significant numbers at double digit kind of increases to get the maximum number have been through it meant for red thermometers into the market.

Place now and we don't have the Pacific Ocean to cross there. So there theres a speed aspects to it as well indicates a probe covers where the demand is more than doubled and that's a very important product for hygiene.

For a helping to prevent contagion and also the accuracy of the thermometer measurements themselves that demand is just as easily putting it to act. That's made me United States and then we've made significant double digits improvements in the capacity there as well and I'm China as the factory production comes back online it's actually gena.

Really.

Almost full strains now I'm there are some government.

Interventions in China, especially in March where a lot of the product was being directed in China.

By the government for China during their peak for four Cove. It as that has come down and there's a restrictions are easing that product is flowing out much better now and we work with multiple suppliers across all different models are there. So there's lots of different place to do the different types.

On the B to B side, it is an opportunity and as I mentioned in my remarks, and I'm glad you.

Your customers are picking up on it or not what we set but with a b to b, which is that employers I want their facilities to be safe. They want their people would be safe and they are increasingly wanted to measure temperatures on people's way in the door, especially in a no contact noninvasive types I think forehead as as an example of that.

They make a lot of forehead thermometers and now the B to B demand is extremely high from a sales channels standpoint, it creates a development opportunity for us and while I can't predict with the new normal will be like on the other side of Cove at 19, if you think back to 911, the kind of airport security that this year to this day what's that.

20 years on there's there's just a new normal in that world I wouldn't be surprised if theres a new normal in the temperature checking world, but it's hard to predict such things in the heat of the moment either way, it's an opportunity for us.

Okay, Great and then going back I guess this is falling onto Olivia's question earlier, just in terms of try and so you know we can reach all it appears at least in recent weeks you've seen acceleration, maybe driven by some the stimulus out there. So if you look at some of your more discretionary product offers like maybe hydro flask have you also see maybe you know I guess consumers retrenching.

Late March early April and I'm.

Feeling better maybe Jim this is helping and trusts picking up any more color just in terms of how how often does discretionary category underperform recently.

Yeah, I'll make a broad comment and then specific the hydro flask. So so broadly we are seeing.

Week over week demand improve.

So this is it's just true in general, it's especially true online and it's now also true in the brick and mortar stores that are open and it's also true for hydro flask, so whether you're talking about volumizer ours.

The OXXO products that we called out specifically and we can go through which categories. It's helpful to you.

And other beauty products and now also hydro flask, you say well why now it's because of the essentials list things. So the online for hydro flask Essentials listing has improved and that has helped us considerably and then consumers themselves. It's possible. What you say it would be speculative for me to confirm.

Or deny but I think it makes sense that as consumers feel more comfortable that they've got the stimulus checks and they can have at least some visibility into the current situation on the idea of making purchases like that maybe makes more sense and two or three weeks ago.

Consumers are also just kinda clamoring I think I don't just common sense that.

The two words that hydro flask stands for it and selling line, which are let's go probably is about the best toward summary of how 7 billion people on the planet Earth field, which is let's get outside and do some stuff and I think I'd springtime in the northern hemisphere, how the whether it's improving the restrictions are loosening and people jumping up a bit.

Okay, great. Thank you for all the car pass along.

Yeah, I hope, it's enough I I really can't predict the future no nobody can but I can say, though the week over week, so there's simply improving and that they are meaningful improvements and I can say that the trends. It it's not like all this week is better than last week. So we'll tell you. It's been every week for the last couple of weeks and the trends I just mentioned or are all happening the health and home its a.

Get different that one is more symptom and cove it driven so that that's different than how consumers feel or how brick and mortar stores are behaving. It's simply that people want to have humidifiers and air purifiers water purifiers and and they need the monitors you'll see recommendations and there's some pretty big and widespread newspaper articles on the mom on.

Excuse me on.

Humidifiers our products I think there were five recommended in one very prominent newspaper of national distribution and they highlighted three favorite products right five freighter prop favorite products three of them more hours or so it means that up or getting getting pretty good attention. I think people are also getting an education now.

Especially millennials and others, who might that I don't need that you asked for my parents to monitor humidifier, something like that and now they're all looking to buy them. So.

It's just good trends out there.

Thank you. Our next question is from the line of Linda Bolton Weiser fatigue. Davidson. Please proceed with your question.

Hi, how are you.

Yeah, Hi, Linda.

So I just wanted to kind of clarify I mean, your tone quite frankly is very positive across categories that I wouldn't expect that even so I guess just in thinking forward I mean, I I think there's a consensus view out there that we're in a severe recession and in the last recession your revenue.

Did decline I think it was in the mid single digits, if I'm remembering correctly and your portfolio is not exactly the same but it's largely the same as it was back then I guess with the addition of hydro flask. So how should we think about the overall portfolio. This time around versus the last recession or maybe you know once we get.

Pass this surge in demand for certain covered related stay at home items, how should we think about that about your business a couple of quarters out and maybe you could also talk about just the trading down phenomenon in some of you more premium priced product line and whether you anticipate there might be some of that that might happen. Thanks sure.

Yes, it's a good question that nobody is immune to recession, but I think it's important to break products into two groups. One is things people need so think of staples and separately things people would like but but maybe there's a substitute that's trading down or cheaper to your to your point I think it's also good to look at.

The last major recession, and ask but what happened so you've already answered one which as you can see what our portfolio did have we've made some significant improvements in our portfolio. Since then but if the question of what happened last time, yeah. There's a good mathematical answer and like I said, we had not such a big decline compared to so many other companies.

Some products that you might think our premium in essential premium yet essential like OXXO nothing kitchen things you might they all people will trade down like Crazy you know why by the $10 can open when you could buy the two dollar can opener, especially if you just don't have a job and nonetheless, a during the great recession about a decade ago OXXO grew 25%.

The drivers of that recession were very different. So this was there was no global pathogen. There was no pandemic. There was no multi trillion dollar Gulf government stimulus directly to consumers at that time. It was to the TARP program and there it was mostly asset and banking other where other things happening a decade ago that are happening today. So I don't know if it's directly comparable I.

I can also say that a lot of our products are thriving so think of the health and home ones that we've mentioned in this environment because of the essentially alipay and on things like beauty or the Volumizer demand is so strong.

Even in this environment, we can't keep up with the so from a supply standpoint, we're working very hard to improve that by the way, but seem good stuff and on the store closure just it's the difference. This time that wasn't true last time that all the stores were closed for a month or something but that is the case. This time and there's not a great cure for that it you can't buy at a store that.

It is not open and you can't go to a store if you're supposed to stay in your house.

Last thing I'd say is very different is online Helen of Troy was a low single digit online player a decade ago today, It's a 24% online players reported in the numbers. We gave just an hour ago and those numbers are significantly better and the market for online products is way more.

Penetrated younger people are buying Amazon prime and none of these things existed a decade ago. So there's a little perspective, and some comparison, but its not the same at the same drivers in upstream recessionary environment.

Yeah. This is Brian I'd, just add I mean, the weight of beauty 10 years ago was dramatically different than it is today beauty was a core business.

Time, we had acquired off so that we haven't even acquired or health care type business. So we haven't health care business today.

We have a business also that that grew consistently and robustly last time this occurred.

And we have a lower weight of beauty and what we do have been duty is very high end demand now and we've seen that consistently and as Julien said the trends have actually improved so we how we're having trouble keeping up with the demand for for the Volumizer inner beauty business and then I would agree that we weren't as pets.

We weren't penetrated online like we are today and I think we're ahead of our peers in terms of online penetration. So I think our portfolio actually works in our favor and the comparison to 10 years goes wrong with that but I think were different company than we were then.

Yeah I'm on the downside I'd say it Drybar will get US launch a close right now just to start right right. There I, but also the it's up that's a much higher end product and it's one that's more discretionary.

So women will I believe soon enough you don't want some time away that wants to meet times at once and pampering. They always want to look good and I wouldn't be surprised if there's a rush on nails route a hair color I think roots and also.

Haircuts and blow out style and the social events and traveling all that pick up overtime.

All the reasons why dry bars drives so much will.

Presumably the feedback on the back in the South.

Okay. That's all for me thank you.

Gordon I, so talk to you.

Thank you. My final question is from the line of Steve Marotta, Let's see Okay Associates. Please proceed with your question.

Good evening, Julian Brian Yeah drilling drilling would you say that the largest.

Supply demand dislocation of all your product lines is currently occurring in for monitors and diligently to coats and what you're doing too and endeavor to remedy the supply chain from a thermometer standpoint, when do you think based on current levels of demand current levels that this.

Apply chain can catch up to that.

Sure Yeah, it's let's start with the with the the first one.

Just just repeat that the second I kept the first let's make sure I hear it one more time <unk>. You've noted a couple of product categories that are current where demand is currently outstripping supply where you're checking product vonage are being one of them I'm asking is thermometers leading.

Where demand is out yeah.

Yeah, I'd say the answer is yes, I'd have to go back in the a triple check just to make sure I don't take it down there on path, but I believe the answers yes, it's it's not alone a though because of the volumizer.

Our comments and so I have it is important I was not it's not just that that one we're seeing demand a very high and in a couple of other categories on the thermometer side. You know we're talking historic Kinda situation, we're just as a global pandemic its unlike others. The only other pandemic I'm aware of in the lifetime probably most.

The people on this call was the swine flu pandemic, which was roughly a decade ago as 2910 like that period of time.

And at that time, I'm, just not the kind of situation that we're in now because that'll take too. Many people died from from swine flu and there was none of the social distancing and two week.

Incubation and the quarantined and other things that are being seen today. So I don't think that those two pandemic ER. So comfortable so that the monitor things off the charts, and then high fever spikes or highly.

Correlated to the early Symptomology for this disease. So moms are big deal. That's the driver. So yes, I think it's likely that that's the out the outside and Brian I think you had a comment on this and then we'll move to Steve's other question.

Yeah. The it does definitely constraint can thermometers that the advantage. We have there is some of our key skews are manufactured in Mexico. So that the lead time is shorter and then the seems that arts manufactured in Mexico thermometers thermometers, because there are small lend themselves to being efficient from an air freight perspective. So.

We can more efficiently airfreight the supply.

And when we're constrained on this monitors then we can and hair dryers and some of the bigger items. So yes. It is their demand is very very strong and hard to keep up with it from a supply perspective, but our supply chain structure. Andy you know the nature of the devices do make it better in terms of being able to ramp up this.

Fly and get the product here, where we need it.

So, it's a little bit better in that sense, but but still a challenge because the demand is so strong.

And I think I mentioned earlier and also in it in the Western Hemisphere. The probe covers for that your mom is where where the overwhelming market leader.

2030, 40 ship when she is kinda numbers in in your thermometer, so where the big player either the number of pro covers we sell you could think of it that's like a number like 1 billion that that it's a big number the demand is multiples of that so it's it's not like we could just one more one more shift and make a few more of course, we've done all of that.

Maxed out the moulds.

Maxed out the shift work maxed out.

All the materials are all the stuff has been done we've also made some I'd call it.

Clever interventions with the suppliers to increase the capacity from there and taken up something like 20, 30%. This kind of thing and the case of the that your thermometers. It's also the case, we've increased the capacity Linde, China, where there's there's plenty of production others. The demand is overwhelming so.

Regarding the absolute most we can out of that of the supply chain. There. Then every single day, we're shipping thermometers people should not here that just because as you have to stock in the store that we don't have any it's that we're allocating what we have making more as fast as we can and putting it into the market, but the demand is high enough. It.

There's just not enough in the case volume misers or it's a completely different driver is just the product is extremely hot and people want them. Even in this environment, it's hard to create enough. So we brought on other suppliers other component suppliers like motors and we have expedited to the point, where it pays out like were trying to say.

Concept of air Airfreight.

Well.

He here, Yeah opened 19, how to add an extreme impact on the ability to have volume misers to meet demand. It did happen right on top of Chinese new year, and you know it took a while for factories to be able to have the labor ward the components to be able to production again.

'cause it component tree was also limited by other factor at factories that weren't able to open. So over 19 had had a very large impact on on the demand is Julien said or capacity is ramped up now to 90 95 getting close to 100%.

But you know there's lead times on production from China and Air freight is very expensive right. Now. So we will have to be choiceful on you know what cost we choose to add to meet the demand.

Sure. That's helpful. Thank you very much.

Yeah, but you got a second question there I don't know if it got enough attention, Steve I'll take it offline you're okay. Thanks.

Okay.

No problem and I hope, but people who understand it's important that they know that that the supply. It's it's it's not like we don't have product. We don't have enough product, which is a good problem to have but we would like to be able to satisfy that the market in full and that's where the 24 seven is happening and then in other areas that we're doing fine on the.

That I think the net of at all and Brian mentioned this in his prepared remarks or is there there's not enough stores opened to overcome all the goodness I. So the net is it's tough to grow in the environment, but every single place where we can be successful we are and the places where the demand is surging were selling literally everything we have.

And in the places, where we could help developer feed the market like online, where we're strong or we are not only feeding it but the market itself strong and then we're supporting those brands to make sure that consumers have awareness the facts out the digital marketing when the pressing choir should we answer the very best we can not to keep the information accurate in the market.

Place and to make sure people know what to do at a time when everybody is worried about health and wants to the very best for their family and when it comes to more discretionary things like the OXXO type of products, maybe you've seen it in your own homes you have the demand for cooking related cleaning related storage just kind of stuff is super high and the product.

You are benefiting meaningfully from that.

Situation and the being.

Close together and as we put in our script children Olden young and I can say that the age of 55.

I'm doing a lot more cooking and I ever have my life.

Thank you.

There are no additional questions disseminates make any final comment.

Yes, yes. Thank you operator, we appreciate everyone being here with us today as well as your supports what we're very very proud of our strong fourth quarter and the full year performance. We just posted for fiscal 20. We're also proud of the outstanding start that that represents for phase two that was the first year phase two.

And it was it was great one a we're working very hard to address the covert 19 crisis I to continue to advance our phase to plan and to emerge strong as the economy reopens, a we look forward to speaking with many of you and this will happen in the coming days and weeks.

We thank you very very much and hope you have a wonderful thank you.

This concludes today's teleconference. You may disconnect your lines for the signed when we thank you for your participation.