Q3 2024 Helen of Troy Ltd Earnings Call

Greetings. Welcome to the Helen of Troy third quarter fiscal 2024 earnings conference call. At this time, all participants are in listen-only mode. The question and answer session will follow the

Greetings and welcome to the Helen of Troy's third quarter fiscal 2024 earnings conference call.

At this time, all participants are in listen only mode.

A question and answer session will follow the formal presentation.

If anyone should require operator assistance during today's conference, please press star zero from your telephone keypad. As a reminder, this conference is

If anyone should require operator assistance during todays conference. Please press star zero from your telephone keypad.

As a reminder, this conference is being recorded.

I'll now turn the conference over to Jack Janssen, Senior Vice President of Corporate Business Development. Mr. Janssen, you may now begin your presentation.

I'll now turn the conference over to Jack Johnson, Senior Vice President of corporate business development.

Mr. Johnson you May now begin your presentation.

Thank you operator.

Jack Janssen: Good morning, everyone, and welcome to Helen Detroit's third quarter fiscal 2024 earnings conference call. The agenda for the call this morning is as follows. I'll begin with a brief discussion and forward looking statement.

Good morning, everyone and welcome to Helen of Troy's third quarter fiscal 2024 earnings conference call.

The agenda for the call. This morning is as follows I'll begin.

And with a brief discussion of forward looking statements.

Jack Janssen: Mr. Julian Minnenberg, the company's CEO , and Ms. Noelle Chafois, the company's COO, will comment on financial performance of the quarter and current trends.

Mr. Julian many Barry <unk>, the company's CEO and Mr. Walsh, you bought the company CFO will comment on financial performance of the quarter and current trends then Mr. Brian grass. The company's CFO will review the financials in more detail and our financial outlook for the remainder of the fiscal 2024.

Jack Janssen: Then Mr. Brian Grass, the company's CFO , will review the financials in more detail and our financial outlook for the remainder of the fiscal 2024. Following this, we will take questions.

Following this we will take questions you have for us today.

Brian Grass: This conference call may contain certain forward-looking statements that are based on management's current expectation with respect to future events or financial performance. Generally, the words anticipates, believes, expects, and other words similar are words identifying forward-looking statements.

This conference call may contain certain forward looking statements that are based on management's current expectation with respect to future events or financial performance generally the words anticipates believes expects and other words similar are words identifying forward looking statements.

Brian Grass: Forward-looking statements are subject to a number of risks and uncertainties that could cause anticipated results to differ materially from the actual results.

Forward looking statements are subject to a number of risks and uncertainties that could cause anticipated results to differ materially from the actual results.

Brian Grass: This conference call may also include information that may be considered non-GAAP financial information.

This conference call May also include information that may be considered non-GAAP financial information.

Brian Grass: These non-GAAP measures are not an alternative to GAAP financial information and may be calculated differently than the non-GAAP financial information disclosed by other parties.

These non-GAAP measures are not an alternative to GAAP financial information and maybe calculated differently than the non-GAAP financial information disclosed by other parties.

Brian Grass: The company causes listeners not to place undue reliance on forward-looking statements or non-GAAP information.

The company cautions listeners not to place undue reliance on forward looking statements or non-GAAP information.

Speaker Change: Before I turn the call over to Mr. Minnenberg, I would like to inform all interested parties that a copy of today's earnings release has been posted to the investor relations section of the company's website at www.helenoftroy.com.

Before I turn the call over to Mr. Muilenburg, I would like to inform all interested parties that a copy of today's earnings release has been posted to the Investor Relations section of the company's website at Www Dot Helen of Troy Dotcom.

Minnenberg: The earnings release contains tables that reconcile non-GAAP financial measures to their corresponding GAAP-based measures.

The earnings release contains tables that reconcile non-GAAP financial measures to their corresponding GAAP based measures. The release can be obtained by selecting the investor Relations tab on the company's homepage and then the press releases tab I will now turn the call over to Mr minute book.

Speaker Change: The release can be obtained by selecting the Investor Relations tab on the company's home page and then the Press Releases tab. I will now turn the call over to Mr. Minnenberg. Thank you, Jack. Good morning, everyone.

Thank you Jack good morning, everyone and thank you for joining us.

Minnenberg: Next morning, we reported results that came in slightly above our expectations.

This morning, we reported results that came in slightly above our expectations.

Minnenberg: pleased with the recent consistency of our results and believe we are on track to achieve our full-year financial objectives.

I'm pleased with the recent consistency of our results and believe we are on track to achieve our full year financial objectives.

Minnenberg: For the past several quarters, our organization has made significant progress across the initiatives we announced at the beginning of fiscal 24, as well as the comprehensive work streams we have been executing under Pegasus.

For the past several quarters, our organization has made significant progress across the initiatives, we announced at the beginning of fiscal 'twenty four.

Well as the comprehensive work streams, we have been executing under Pegasus.

Minnenberg: This outstanding work has helped enable our results in Fiscal 24 and helped set us up for future growth.

This outstanding work has helped enable our results in fiscal 'twenty four it helps set us up for future growth.

Speaker Change: Today marks my last earnings call with you as CEO of Helen of Troy.

Today marks my last earnings call with you as CEO of Helen of Troy.

Speaker Change: As previously announced, after 10 years in my current role, 20 years in C-level roles, and 34 years in the global consumer products industry, I will be retiring on March 1.

As previously announced after 10 years in my current role 20 years in C level roles in 34 years and the global consumer products industry I will be retiring on March 1st.

Speaker Change: and Noël Jafoua will become only the third CEO since the company's founding in 1968.

The wells you fly will become only the third CEO since the company's founding in 1968.

Well, it's an outstanding leader.

Speaker Change: In addition to her work as COO, she has been working very closely with our global leadership team and the rest of our organization to develop and implement the Elevate for Growth strategy details in our Investor Day last October . As I look back on the past decade, leading the

In addition to her work at C. O O. She has been working very closely with our global leadership team and the rest of our organization to develop and implement the elevate for growth strategy detailed in our Investor Day last October.

As I look back on the past decade, leading the company's transformation has been an honor.

Speaker Change: I am very proud of what we have achieved. When I became CEO in 2014, we challenged ourselves to increase sales of Helen of Troy by 50% and we asked ourselves what it would take to double adjusted earnings per share.

I'm very proud of what we've achieved when I became CEO in 2014, we challenged ourselves to increase sales of Helen of Troy by 50% and we asked ourselves what it would take to double adjusted earnings per share.

Far exceeded those goals not only on the business results, but also by significantly strengthening our brand portfolio through strategic acquisition and divestiture.

Speaker Change: not only on the business results, but also by significantly strengthening our brand portfolio through strategic acquisition and divestiture, and further building our existing brands into consumer-preferred solutions that are trusted, purchased, used, and adored.

And further building our existing brands into consumer preferred solutions that are trusted purchased used in the door.

Speaker Change: We also established a set of highly capable global shared services that drive efficiency and effectiveness.

We also established a set of highly capable global shared services that drive efficiency and effectiveness.

Speaker Change: Our relentless focus over the past decade has been on executing the transformation with excellence, creating and delivering.

Our relentless focus over the past decade has been on executing the transformation with excellence.

The aging and delivering countless innovations.

Speaker Change: designed each to delight consumers, and continuously improving our capabilities as a unified global operating company. I am most proud of the powerful culture we created.

Designed each to delight consumers and continuously improving our capabilities as a unified global operating company.

I am most proud of the powerful culture, we created it.

It helps make the company an employer of choice.

Speaker Change: From all corners of Helen of Troy, our global associates work every single day to do together what none can do alone.

From all corners of Helen of Troy, Our global Associates work every single day to do together, what none can do alone.

Speaker Change: We take enormous pleasure in serving millions of consumers and retailers around the world. I would like to thank our people for their enduring passion.

We take enormous pleasure in serving millions of consumers and retailers around the world.

I would like to thank our people for their enduring passion.

Engagement and ownership mindset.

Speaker Change: I am inspired by their never-ending devotion to drive the company, its brands, and its timeless values. They are the secret.

I'm inspired by their never ending devotion to drive the company its brands and its timeless values.

They are the secret sauce of Helen of Troy.

Speaker Change: Before I turn the call over to Noelle, I would like to leave you with one more thought. I remain confident that the best...

Before I turn the call over to Noel I would like to leave you with one more thought.

I remain confident that the best is still to come.

Noelle Chafois: Noel is the right-neck CEO , the Elevate for Growth strategy has just the right balance of newness and continuity, and the organization is fully committed to delivering its stretching yet achievable goals.

No. It was the right next CEO yellow V for growth strategy has just the right balance of newness and continuity and the organization is fully committed to delivering it stretching yet achievable goals.

Speaker Change: To close, I would like to thank you, our investors and analysts.

To close I would like to thank you our investors and analysts I have enjoyed getting to know so many of you throughout my tenure.

Speaker Change: I have enjoyed getting to know so many of you throughout my tenure.

Speaker Change: I learned from you and I worked hard to use your input to make myself and our company significantly stronger and better. With that, on to Noel.

Learn from you and I worked hard to use your input to make myself and our company significantly stronger and better.

With that I want to know well.

Noel: Thank you, Julian, and congratulations on your distinguished career. Your leadership over the last 10 years has transformed Talent of Troy from a holding company into a focused operating company and a leader in consumer devices and consumables with an outstanding brand portfolio and a highly capable global organization.

Thank you Julian and congratulations on your distinguished career your leadership over the last 10 years has transformed Helen of Troy from a holding company into a focused operating company and a leader in consumer devices and consumables with an outstanding brand portfolio at a highly capable global organization.

Noel: Building on its 50 plus year heritage, you repositioned Helen of Troy to create significant value and set a foundation for a bright future.

On its 50 plus year heritage you repositioned Helen of Troy to create significant value and set a foundation for a bright future.

Noel: Above all, he led with genuine care and appreciation for all stakeholders, creating a powerful culture and an enduring legacy.

All he left with genuine care and appreciation for all stakeholders, creating a powerful culture and an enduring legacy the entire organization will Miss you and we wish you all the very best in your retirement.

Noel: The entire organization will miss you and we wish you all the very best in your return.

Noel: Now, let's turn to our third quarter business results and outlook for the remainder of.

Now, let's turn to our third quarter business results and outlook for the remainder of the year.

Noel: As Julian highlighted, our third quarter consolidated net sales and adjusted EPS were slightly better than the outlook we provided in October .

As Julian highlighted our third quarter consolidated net sales and adjusted EPS were slightly better than the outlook. We provided in October we.

Noel: We are pleased to be in a position to end the fiscal year within the ranges of our original full year outlook for net sales, adjusted EPS, and free cash.

We are pleased to be in a position to end the fiscal year within the ranges of our original full year outlook for net sales adjusted EPS and free cash flow.

Noel: For perspective, the midpoint of our current outlook for net sales and adjusted EPS is essentially the same as what we provided at the beginning of the fiscal year, and we have maintained our outlook for free cash.

For perspective, the midpoint of our current outlook for net sales and adjusted EPS is essentially the same as what we provided at the beginning of the fiscal year and we have maintained our outlook for free cash flow. We also expect continued expansion of our gross margin and further improvement to our debt position.

Noel: We also expect continued expansion of our gross margins and further improvement to our debt position.

Brian will elaborate further during his remarks. In addition, our purchase initiatives remain on track and are enabling improved efficiency and effectiveness in fiscal 'twenty four.

Noel: In addition, our Pegasus initiatives remain on track and are enabling improved efficiency and effectiveness in fiscal 24.

Noel: Third quarter net sales declined 1.6 percent, an improvement versus the decline of 2 to 4 percent in the outlook we provided in October .

Third quarter net sales declined one 6% an improvement versus the decline of 2% to 4% and the outlook we provided in October.

Noel: adjusted diluted EPS was $2.79, or 1.3% increase over the same period last year, and also slightly ahead of our expectations.

Adjusted diluted EPS was $2 79, or one 3% increase over the same period last year and also slightly ahead of our expectations.

Noel: During the quarter, we further expanded our gross margin by over 200 basis points.

During the quarter, we further expanded our gross margin by over 200 basis points controlled expenses, while still investing in our strategic initiatives and built on our strong cash flow generation, we have been delivering over the past five quarters with a further $66 million of free cash flow.

Noel: controlled expenses while still investing in our strategic initiatives, and built on the strong cash flow generation we have been delivering over the past five quarters with a further $66 million free cash flow.

Noel: This is a solid outcome in what continues to be a challenging macro-consumer environment and is a testament to the initiatives we have chosen, the talent and dedication of our global associates.

This is a solid outcome in what continues to be a challenging macro consumer environment and is a testament to the initiatives. We have chosen the talent and dedication of our global associates and the strength of our brands.

Noel: Macro trends have remained broadly consistent since we spoke to you in October .

Macro trends have remained broadly consistent since we spoke to you in October.

Noel: Persistent inflation and reduced household savings continue to require consumers to make tough choices on all types of spending.

Persistent inflation and reduced household savings continue to require consumers to make tough choices on all types of spending.

Noel: While overall consumer confidence has recently improved and the pace of inflation has slowed somewhat, consumers remain prudent with their money and continue to prioritize spending on travel and other entertainment experiences.

While overall consumer confidence has recently improved and the pace of inflation has slowed somewhat consumers remain prudent with our money and continue to prioritize spending on travel and other entertainment experiences.

Noel: We saw this trend play out with holiday performance for our brand.

We saw this trend play out with holiday performance for our brand portfolio Osprey in OXXO performed well overall hydro flask performed well online and our hair tools performed below expectations.

Noel: Osprey and Oxo performed well overall, Hydroflask performed well online, and our hair tools performed below expectations. As this consumer.

As this consumer environment has evolved so have we.

Noel: We spoke earlier this year about the ways we are expanding our product assortment to incremental channels and price points to improve our availability and relevance in this environment. I am pleased with the progress of these efforts as we see benefits from expanded distribution, new product offerings, and organizational changes.

We spoke earlier this year about the ways, we are expanding our product assortment to incremental channels and price points to improve our availability and relevance in this environment.

I'm pleased with the progress with these efforts as we see benefits from expanded distribution, new product offerings and organizational changes.

Noel: As we prepare for fiscal 25, our entire organization is working to advance the ambitious set of initiatives and goals that we announced as part of our Elevate for Growth strategic plan at our October Investor Day.

As we prepare for fiscal 'twenty five our entire organization is working to advance the ambitious set of initiatives and goals that we announced as part of our elevate for growth strategic plan at our October Investor Day.

Turning now to our second.

Noel: Home and outdoor net sales grew 3.1% over the prior year period, driven by strong club channel sales, new product introductions, and expanded distribution and sell-through.

Home and outdoor net sales grew three 1% over the prior year period, driven by strong club channel sales, new product introductions and expanded distribution and sell through.

Noel: Starting with OXO, the brand was a standout in the quarter, excluding the impact of the bed, bath, and toilet.

Starting with OXXO the brand was a standout in the quarter.

Excluding the impact of the bed Bath and beyond bankruptcy overall point of sale was strongly positive during the three month period and OXXO grew market share in our core kitchen utensils segment.

Noel: Overall point of sale was strongly positive during the three-month period, and OXO grew market share in the core kitchen utensil segment.

Noel: Brick and mortar growth was primarily driven by our club program.

Brick and mortar growth was primarily driven by our club programs as well as expanded distribution of OXXO with several of our major retail partners in the Bath kitchen organization and gadget categories.

Noel: as well as expanded distribution of OXO with several of our major retail partners in the bath, kitchen organization, and gadget categories.

Noel: Our product offerings also performed very well online, growing double digits over the same period last year, driven by success in the electrics and infant and toddler categories.

Our product offerings also performed very well online growing double digits over the same period last year driven by success in the electrics and infant and toddler categories.

Noel: OXO also benefited from strong sales across brick-and-mortar and online as consumers turned their attention to holiday entertainment.

Oxo also benefited from strong sales across brick and mortar and online as consumers turned their attention to holiday entertaining.

Noel: Turning to Hydro Flask, as anticipated, consumer demand in the insulated beverage wear category continued to shift from bottles to tumblers.

Turning to hydro flask as anticipated consumer demand in the insulated beverage ware category continued to shift from bottles tumblers.

Noel: We benefited from a full quarter of our new travel Tumblr, including the launch of some new on-trend colors.

We benefited from a full quarter of our new travel Tumblr, including the launch of some new on trend colors.

Noel: As mentioned previously, we progressively rolled out our Tumblr line to retailers in September and October and continue to be pleased with both the consumer and retailer reception.

As mentioned previously we progressively rolled out our Tumblr line to retailers in September and October and continue to be pleased with both our consumer and retailer reception online sales for hydro flask were up driven by demand for our travel tumblers as well as some accelerated holiday Logan.

Noel: Online sales for Hydro Flats were up, driven by demand for our travel tumblers, as well as some accelerated holiday loading.

Noel: We also saw increased demand for personalization through our MyHydro website.

We also saw increased demand for personalization through our my hydro our website.

Moving now to Oscar the brand continues to benefit from new innovation that meet consumers' desires to get out and travel.

Noel: The brand continues to benefit from new innovations that meet consumers' desires to get out and travel.

Noel: Strong demand and a better inventory position compared to the prior year period drove sales of Osprey travel packs, travel wheeled packs, and lifestyle packs.

Strong demand and a better inventory position compared to the prior year period drove sales of Osprey travel pats travel wheel paths and lifestyle packs.

Noel: New innovations, such as Osprey's Sojourn Travel Series, redesigned for fall 2023, provide luggage and travel packs for adventure-seeking travelers.

New innovations such as the Osprey sojourn travel series redesign for fall 2023 provides luggage and travel tax for adventure seeking travelers.

Noel: The all-new AODES collection of lifestyle packs have also been doing well, offering Osprey's take on best-in-class comfort and urban sophistication.

The all new Air collection of lifestyle packs have also been doing well offering osprey take on best in class comfort and urban statistics <unk>.

Noel: Internationally, the brand continued to perform very well, with growth in key regions of Great Britain, Germany, and France driven by strong travel demand, brand strength, and a robust product line.

Internationally the brand continued to perform very well with growth in key regions, a great Britain, Germany, and France, driven by strong travel demand brand strength and a robust product lineup.

Noel: Stepping back, Osprey's growth continues to exceed our expectations and acquisition of some.

Stepping back Ospreys growth continues to exceed our expectations and acquisition assumptions.

Noel: Switching gears now to our beauty and wellness segment, net sales declined 4.9%, primarily driven by lower sales of hair appliances.

Switching gears now to our beauty and wellness segment net sales declined four 9%, primarily driven by lower sales of hair appliances, as well as a softer start to the cough cold and flu season versus prior year, which impact sales of our human application and thermometry products.

Noel: as well as a softer start to the cough, cold, and flu season versus prior year, which impacts sales of our humidification and thermometry products.

Noel: While we have seen an increase in incidents since mid-November, cumulative incidents for the illness season was below year-ago for the third quarter and in December .

While we have seen an increase in incidents since mid November cumulative incidents for the illness season was below a year ago for the third quarter and in December.

Noel: Despite recent news reports citing increased cough, cold, flu, and COVID incidents, our outlook now assumes the season will be below historical average.

Despite recent news reports, citing increased cough cold flu and Covid incidents our outlook now assumes the season will be below historical averages.

Noel: Ultimately, the impact on our results will depend on the severity and timing of the illness season and the resulting retailer inventory replenishment.

Ultimately the impact on our results will depend on the severity and timing of the illness season, and the resulting retailer inventory replenishment.

Noel: Looking at our beauty portfolio specifically, while our hair appliances declined versus a year ago, we gained market share on our key brands and mass retailers with our expanded assortment.

Looking at our beauty portfolio, specifically, while our hair appliances declined versus a year ago, we gained market share on our key brands and mass retailers with our expanded assortment.

Noel: In addition, Drybar and Curlsmith Prestige Liquids continued to grow behind strong innovation pipelines.

In addition, dry bar and Karl Smith prestige liquids continued to grow behind strong innovation pipelines.

Noel: Drybar's Big Brew Hair Thickening Cream saw strong performance by delivering on the highly desired consumer benefit of thicker looking hair.

<unk> Big Bro hair thickening cream saw strong performance by delivering on the highly desired consumer benefit a sticker looking hair.

Noel: Curl Smith Anti-Frizz Collection quickly became one of our best sellers and a consumer favorite by addressing the number one unmet need among textured hair consumers.

Carl Smith's anti Frizz collections quickly became one of our best sellers and a consumer favorite by addressing the number one unmet need among textured hair consumers.

Noel: In our wellness portfolio, Braun grew double digits driven by strong demand in our key international markets.

And our wellness portfolio Bron grew double digits, driven by strong demand in our key international markets.

Noel: This growth also translated to higher market share, helped by our improved supply position to better meet the growing demand.

This growth also translated to higher market share helped by our improved supply position to better meet the growing demand.

Noel: Towards the end of the third quarter, we leaned into online marketing and e-commerce support for our VIX brand and saw a double-digit pickup in demand.

Towards the end of the third quarter, we leaned into online marketing and E Commerce support for our Vicks brand and saw double digit pickup in demand as the branded market leader in the U S. Vicks humidifiers vapor steam and vapor paths are well positioned to serve retailers and consumers if the illness incidents access.

Noel: As the branded market leader in the U.S., Vick's humidifiers, VapoSteam, and VapoPads are well-positioned to serve retailers and consumers if the illness incidence accelerates.

Right.

Noel: In water filtration, pure increased market share for both faucet mount and pitcher systems behind increased demand in e-commerce and key brick-and-mortar customers.

And water filtration pure increased market share for both faucet mounts and pitcher system behind increased demand in e-commerce, and key brick and mortar customers.

Noel: Looking at our international business, sales were better than we expected, largely due to outperformance in EMEA from Braun and Osprey. As mentioned, Braun benefited from increased supply and Osprey enjoyed strong demand from continued growth and travel.

Looking at our international business sales were better than we expected largely due to outperformance in EMEA from Braun and Osprey, I've mentioned <unk> benefited from increased supply and Osprey enjoyed strong demand from continued growth in travel.

Speaker Change: Before I turn the call over to Brian , I want to share that our organization is energized and motivated to finish this fiscal year strong as we advance into the Elevate for Growth era.

Before I turn the call over to Brian I want to share that our organization is energized and motivated to finish this fiscal year strong as we advance into the elevate for growth's HERA.

Brian Grass: As detailed in our recent investor day, the multi-year Elevate for Growth strategic plan builds on successful themes while also introducing several new strategies that I am optimistic will help us elevate to the next level.

As detailed in our recent Investor day, the multi year elevate for growing strategic plan built on our successful teams. While also introducing several new strategies that I'm optimistic will help us elevate to the next level.

Brian Grass: One of those strategies is to be consumer-obsessed in all that we do.

One of the strategies is to be consumer obsessed and all that we do.

Brian Grass: As I shared in October , we are in the process of sharpening our brand equities to ensure our target consumer and brand positioning definitions are clear, distinctive, and inspiring.

As I shared in October we are in the process of sharpening our brand equities to ensure our target consumer and brand positioning definitions are clear distinctive and inspiring.

Brian Grass: This is the foundation that we believe will lead to elevated grant activation and pipeline.

This is the foundation that we believe will lead to elevated brand activation and pipelines.

Brian Grass: I'm pleased with the progress and engagement I'm seeing across our organization and its critical work. We believe this, combined with the fuel generated by Pegasus, will allow us to deploy even more investment dollars into our brands, supported by more focused, data-driven investments.

I am pleased with the progress of engagement I'm seeing across our organization and its critical work. We believe this combined with the fuel generated by Pegasus will allow us to deploy even more investment dollars into our brands supported by more focused data driven investment choices.

Brian Grass: We also intend to continue to expand our distribution, making our brands more available and more visible where our shoppers are shopping.

We also intend to continue to expand our distribution, making our brands more available and more visible where our shoppers are shopping.

Brian Grass: We will also continue to lean into next level centralization of shared services so that we leverage our functional expertise in all that we do.

We will also continue to lean in to next level centralization of shared services. So that we leverage our functional expertise and all that we do.

Speaker Change: I believe the best is yet to come for Helen of Troy in the Elevate for Growth era. With that, I would like to hand the call over to Brian .

I believe the best is yet to come for Helen of Troy in the elevate progressing there and with that I would like to hand, the call over to Brian.

Thank you and well happy new year, everyone. I'm pleased to report third quarter results that exceeded our expectations, we achieved better than expected net sales further strengthened gross margin grew adjusted EPS and generated strong cash from operations that puts US ahead of schedule at this point a year.

Brian Grass: to report third quarter results that exceeded our expectations.

Brian Grass: We achieved better than expected net sales, further strengthened gross margin.

Brian Grass: grew adjusted EPS and generated strong cash from operations that puts us ahead of schedule at this point.

Brian Grass: Our adjusted EBITDA margin was largely flat despite higher marketing and annual incentive compensation expense.

Our adjusted EBIT margin was largely flat, despite higher marketing and annual incentive compensation expense.

Brian Grass: and lower operating leverage compared to the same period last year.

Sure operating leverage compared to the same period last year.

Brian Grass: Our adjusted EPS of $2.79 exceeded expectations, even as we overcame a charge of approximately $0.05 related to the Rite Aid bankruptcy during the quarter.

Our adjusted EPS of $2 79.

We exceeded expectations, even as we overcame a charge of approximately <unk>.

Related to the Rite aid bankruptcy during the quarter.

Brian Grass: Our Pegasus initiatives remain on track and we use fuel from Pegasus to make incremental growth investments during the quarter.

Our Pegasus initiatives remain on track and we use fuel from Pegasus to make incremental growth investments during the quarter.

Brian Grass: Consolidated net sales decreased 1.6 percent, which is favorable to the 4 to 2 percent decline we provided in our outlook and update.

Consolidated net sales decreased one, 6%, which was favorable to the 4% to 2% decline we provided in our outlook in October.

Brian Grass: As a reminder, our outlook continues to include the estimated year-over-year declines from SKU rationalization and the Bed Bath & Beyond bankruptcy of approximately 3.4% combined.

As a reminder, our outlook continues to include the estimated year over year declines from SKU rationalization and the bed Bath <unk> beyond bankruptcy of approximately three 4% combined gross profit margin improved 210 basis points to 48%.

Brian Grass: Gross profit margin improved 210 basis points to 48% compared to 45.9% in the same period last year, largely in line with our expectations for the quarter. Year-over-year improvement was due to lower inbound trade costs, the favorable impact of skew rationalization and beauty and wellness, and the more favorable customer mix within

<unk> to 45, 9% in the same period last year largely in line with our expectations for the quarter year over year improvement was due to lower inbound freight costs, the favorable impact of SKU rationalization, and beauty and wellness and a more favorable customer mix within home and outdoor.

Brian Grass: These factors were partially offset by a less favorable product mix within beauty and wellness and a less favorable sales mix overall. Gap operating margin for the quarter was 19.5% compared to 13.8% in the same period last year. Gap operating margin includes a gain of $34.2 million from the sale of our El Paso facility that was completed during the quarter.

These factors were partially offset by a less favorable product mix within beauty and wellness and a less favorable sales mix overall.

GAAP operating margin for the quarter was 19, 5% compared to 13, 8% in the same period last year GAAP operating margin includes a gain of $34 2 million from the sale of our El Paso facility that was completed during the quarter as.

Brian Grass: as compared to a gain of $9.7 million from insurance recoveries included in the same period last year. On an adjusted basis, operating margin declined 30 basis points to 16.3 percent. Decrease primarily reflects higher annual incentive compensation and marketing expense, the Rite Aid bankruptcy charge, lower operating leverage.

As compared to a gain of $9 7 million from insurance recoveries included in the same period last year on an adjusted basis operating margin declined 30 basis points to 16, 3% decrease primarily reflects higher annual incentive compensation and marketing expense the rite aid bankruptcy charge lower operating.

Leverage a less favorable sales mix overall and.

Brian Grass: higher distribution expense as we fine-tune our new state-of-the-art distribution facility and fully integrate it into our network in fiscal 25.

And higher distribution expense as we fine tune, our new state of the art distribution facility and fully integrated into our network in fiscal 'twenty five.

Brian Grass: These factors were partially offset by lower inbound and outbound freight costs.

These factors were partially offset by lower inbound and outbound freight costs.

Brian Grass: lower salary and wage costs, primarily due to our Pegasus role reduction.

Lower salary and wage costs, primarily due to a package this role reductions the.

Brian Grass: The favorable impact of skew rationalization and beauty and wellness and a more favorable customer mix would.

The favorable impact of SKU rationalization, and beauty and wellness and a more favorable customer mix within home and outdoor.

Brian Grass: On a segment basis, home and outdoor adjusted operating margin decreased 50 basis points to 16.9%.

On a segment basis home and outdoor adjusted operating margin decreased 50 basis points to 16, 9%.

Brian Grass: Driven by higher distribution and depreciation expense related to our new distribution facility.

Driven by higher distribution and depreciation expense related to our new distribution facility.

Brian Grass: increased marketing expense, an increase in inventory reserve expense, and higher annual incentives.

Increased marketing expense and increase in inventory reserve expense.

And higher annual incentive compensation expense. These factors were partially offset by lower inbound and outbound freight costs lower commodity costs, lower salary and wage costs, driven by Pegasus and a more favorable customer mix adjust.

Brian Grass: These factors were partially offset by lower inbound and outbound freight costs, lower commodity costs, lower salary and wage costs driven by Pegasus.

Brian Grass: adjusted operating margin for beauty and wellness was in line with the prior year period at 16% despite lower operating.

Adjusted operating margin for beauty and wellness was in line with the prior year period at 16% despite lower operating leverage the segment's adjusted operating margin reflects lower inbound and outbound freight costs reduced inventory reserve expense.

Brian Grass: The segment's adjusted operating margin reflects lower inbound and outbound freight costs, reduced inventory reserve expense. The favorable

Favorable impact of SKU rationalization decreased distribution expense and lower salary and wage costs driven by Pegasus.

Brian Grass: decreased distribution expense, and lower salary and wage costs driven by Pegasus.

Brian Grass: These factors were offset by an increase in annual incentive compensation expense, higher marketing expense.

These factors were offset by an increase in annual incentive compensation expense higher marketing expense the rite aid bankruptcy charge and a less favorable product mix net income was $75 9 million or $3 19 per diluted share.

Brian Grass: the Rite Aid bankruptcy charge, and a less favorable product.

Brian Grass: Net income was $75.9 million, or $3.19 per diluted share.

Brian Grass: non-GAAP adjusted diluted EPS grew 1.5% to $2.79 per share, primarily due to a decrease in the adjusted effective tax rate. Lower diluted shares outspanned.

non-GAAP adjusted diluted EPS grew one 5% to $2 79 per share.

Due to a decrease in the adjusted effective tax rate lowered diluted shares outstanding and a decrease in interest expense, partially offset by lower adjusted operating income.

Brian Grass: and a decrease in interest expense, partially offset by lower adjusted operating costs.

Brian Grass: As previously disclosed, during the third quarter, we closed on the sale of our El Paso distribution and office facility for total proceeds of $51 million.

As previously disclosed during the third quarter, we closed on the sale of our El Paso distribution and office facility for total proceeds of $51 million.

Brian Grass: During the third quarter, we recognized a pre-tax gain on the sale of approximately $34.2 million in SG&A of which approximately $18 million was recognized in beauty and wellness, and $16.2 million in home improvement.

During the third quarter, we recognized a pretax gain on the sale of approximately $34 2 million and SG&A of which approximately $18 million was recognized in beauty and wellness.

$16 2 million at home and outdoor.

Brian Grass: We continue to generate strong cash flow with cash from operations of $75 million in the third quarter.

We continued to generate strong cash flow with cash from operations of $75 million in the third quarter.

Brian Grass: Your today cash flow from operations was $233 million, which is an improvement of $183 million year over year.

To date cash flow from operations was $233 million, which is an improvement of $183 million year over year.

Brian Grass: We ended the quarter with total debt $736 million.

We ended the quarter with total debt $736 million.

Brian Grass: a sequential decrease of 109 million compared to the end of the second quarter.

The sequential decrease of $109 million compared to the end of the second quarter.

Brian Grass: and a $345 million decrease compared to the same period last year. Our net leverage ratio

And the $345 million decrease compared to the same period last year.

Our net leverage ratio was two three or four times.

Brian Grass: compared to 2.68 times at the end of the second quarter.

Prior to 2.68 times at the end of the second quarter and.

Brian Grass: and 3.1 times at the same time last year.

And three one times at the same time last year.

Brian Grass: Turning to our full-year outlook for Fiscal 24, we are fine-tuning our range for net sales and adjusted diluted EPS.

Turning to our full year outlook for fiscal 'twenty four we're fine tuning our range for net sales and adjusted diluted EPS.

Brian Grass: We're also raising our outlook for gap-diluted EPS to reflect lower expected restructuring

We're also raising our outlooks for GAAP diluted EPS to reflect lower expected restructuring charges and narrowing the range to align with the adjusted diluted EPS expectations.

Brian Grass: and narrowing the range to align with the adjusted diluted EPS expectation.

Brian Grass: We are maintaining our outlook for pre-cash flow, collecting slightly lower cash from operations, offset by slightly lower capital expenditures, and maintaining our ending net.

We are maintaining our outlook for free cash flow, reflecting slightly lower cash from operations.

Set by slightly lower capital expenditures.

Maintaining our ending net leverage ratio expectations.

Brian Grass: Finally, we are lowering our adjusted EBITDA outlook to reflect lower adjusted operating income and a lower depreciation at back than originally expected.

Finally, we are lowering our adjusted EBITDA outlook to reflect lower adjusted operating income and a lower depreciation add back than originally expected.

Brian Grass: The lower Adjusted Operating Income reflects a slightly less favorable sales mix.

The lower adjusted operating income reflects a slightly less favorable sales mix and the impact of incremental growth investments as compared to our original expectations. Our outlook factors in our year to date performance as well as our view of continued pressure and uncertainty on consumer spending.

Brian Grass: and the impact of incremental growth investments as compared to our original expectations.

Brian Grass: Our outlook factors in, our year-to-date performance, as well as our view of continued pressure and uncertainty on consumer spending. Softer than expected.

Softer than expected holiday sales season.

Brian Grass: and lower illness incidents than the prior year, which was in line with pre-COVID historical average.

Lower illness incidents than in the prior year, which was in line with pre Covid historical averages.

Brian Grass: Finally, we believe retail inventory as a whole is at healthy levels, and we continue to expect that sell-in will more closely match sell-through during the remainder of fiscal 24.

Finally, we believe retail inventory as a whole is at healthy levels and we continue to expect that sell in will more closely match sell through during the remainder of fiscal 'twenty four.

Brian Grass: We now expect consolidated net sales between 1.975 and 2 billion in fiscal 24, which continues to reflect the combined unfavorable year-over-year impacts, obscure rationalization, and the bankruptcy at Bet-Bath & Beyond of approximately 3.4 percent, as I referred to earlier.

We now expect consolidated net sales between $1 97, five and 2 billion in fiscal 'twenty, four which continues to reflect the combined unfavorable year over year impacts of SKU rationalization and the bankruptcy at bed Bath and beyond of approximately three 4% as I referred to earlier.

Brian Grass: This compares to our previous range of 1.965 billion to 2.015.

This compares to our previous range of $1 96, 5 billion to 2.015 billion.

Brian Grass: In terms of our Net Sales Outlook by segment for the full fiscal year.

In terms of our net sales outlook by segment for the full fiscal year.

Brian Grass: We now expect a home and outdoor decline of 1.5 to 0.5% and a beauty and wellness decline of 7.5 to 5.5.

Now expect the home and outdoor decline of one 5% to 0.5% and a beauty and wellness decline of 7.5 to five 9%. We now expect GAAP diluted EPS of $6 67 and.

Brian Grass: We now expect GAAP diluted EPS of $6.67, $7.05 for the full year.

$7 five for the full year compared to our previous expectation of $6 36 to $7 three.

Brian Grass: Compared to our previous expectation, $6.36 to $7.03.

Brian Grass: We are narrowing our outlook range for non-gap adjusted diluted EPS to $8.60 to $8.85.

We are narrowing our outlook range for non-GAAP adjusted diluted EPS to $8 60.

$8 85.

Brian Grass: compared to our previous expectation of $8.50 to $9.

Compared to our previous expectation of $8 50.

To $9.

Brian Grass: Moving on to our tax outlook, we now expect a gap effective tax rate range of 20 to 19% for the full fiscal year and are maintaining our expectations for a non gap adjusted effective tax rate range of 14.5 to 13.5%.

Moving on to our tax outlook, we now expect the GAAP effective tax rate range of 20% to 19% for the full fiscal year and are maintaining our expectations for our non-GAAP adjusted effective tax rate range of $14 five to 13, 5%.

Brian Grass: We now expect capital asset expenditures of between 40 and 45 million for fiscal 24. Compared to our previous expectation before.

We now expect capital asset expenditures of between 40% and $45 million for fiscal 'twenty four.

Compared to our previous expectation of $45 million to $50 million.

Brian Grass: We continue to expect free cash flow to be in the range of $250 to $270 million, reflecting slightly lower cash flow from operations and slightly lower capital expenditures.

We continue to expect free cash flow to be in the range of $250 million to $270 million, reflecting slightly lower cash flow from operations and slightly lower capital expenditures as just mentioned.

Brian Grass: We now expect adjusted EBITDA of $330 to $335 million, which implies growth of 0.8% to $2.5%.

We now expect adjusted EBITDA of $330 million to $335 million, which implies growth of 8% to two 3%.

Brian Grass: compared to our previous expectation of 3.2% to 6.3% growth.

Compared to our previous expectation of three 2% to six 3% growth.

Brian Grass: We are maintaining our net leverage ratio outlook of 2 times to 1.85 times by the end of fiscal 24.

We are maintaining our net leverage ratio outlook of two times to 185 times by the end of fiscal 'twenty four.

Yeah.

Speaker Change: In closing, I'm pleased with our results here today, which position us to end the year within the ranges of our original full year outlook for net sales.

In closing I'm pleased with our results year to date, which position us to end the year within the ranges of our original full year outlook for net sales adjusted EPS free cash flow and the end of your debt leverage.

Speaker Change: Adjusted EPS, free cash flow, and end of year debt.

Speaker Change: More specifically, the midpoint of our revised outlook for net sales and adjusted EPS is essentially the same as provided at the beginning of the fiscal year. We have fully maintained our outlook for pre-cash flow and ending debt levels.

More specifically the midpoint of our revised outlook for net sales and adjusted EPS is essentially the same as provided at the beginning of the fiscal year and we are fully maintained our outlook for free cash flow and ending debt leverage.

Speaker Change: I'm also pleased with our sequential improvement in year-over-year sales and gross profit performance throughout the year.

I'm also pleased with our sequential improvement in year over year sales and gross profit performance throughout the year.

Speaker Change: Our teams are doing a great job at continuing to navigate the pressure consumer environment as well as the structural headwinds of higher annual incentive compensation, depreciation and interest expense.

Our teams are doing a great job of continuing to navigate a pressured consumer environment as well as the structural headwinds of higher annual incentive compensation depreciation and interest expense year to date, we have improved our gross profit margins by 340 basis points largely maintained our adjusted EBITDA margin despite structural headwinds.

Speaker Change: Year-to-date, we have improved our gross profit margin by 340 basis points.

Speaker Change: Largely maintained or adjusted EBITDA margin despite structural headwinds and lower operating leverage. Generated $203 million in free cash flow.

Lower operating leverage.

Generated $203 million in free cash flow improved.

Improved balance sheet productivity.

Speaker Change: accelerated debt repayment, and returned capital to shareholders.

Accelerated debt repayment and return capital to shareholders.

Speaker Change: We continue to expect Pegasus to provide the fuel and operational improvements that allow us to achieve the objectives we outlined in our investor day.

We continue to expect <unk> to provide the fuel and operational improvements that allow us to achieve the object objectives, we outlined in our Investor day.

Speaker Change: which are average annual growth rates of 3-4% for net sales, 30-40 basis points of adjusted EBITDA margin expansion, and at least 10% adjusted EPS growth.

Which our average annual growth rates of 3% to 4% for net sales 30, 40 basis points of adjusted EBITDA margin expansion and at least 10% adjusted EPS growth.

Speaker Change: We look forward to providing our fiscal 25 outlook on our normal timing when we report our Q4 results in April . And with that, I'll turn it back to the operator for questions.

We look forward to providing our fiscal 'twenty five outlook on a normal normal timing when we report our Q4 results in April.

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

Thank you well now be conducting a question and answer session.

Speaker Change: If you'd like to ask a question today, please press star 1 from your telephone keypad and a confirmation tone will indicate that your line is in the question queue. You may press star 2 if you'd like to withdraw your question.

If you'd like to ask a question today. Please press star one from your telephone keypad, a confirmation tone will indicate your line is in the question queue.

You May press star two if he would like to withdraw your question from the queue.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.

For participants using speaker equipment may be necessary to pick up your handset before pressing the star keys.

One moment, please we poll for questions. Thank.

Thank you.

Speaker Change: Our first question today comes from the line of Bob Lamek with CJS Securities. Please just use your question.

Our first question today comes from the line of Bob <unk> with CJS Securities. Please proceed with your question.

Good morning, and happy new year to you all.

Bob Lamek: Hey, Bob. Hey, Bob. Hi. I wanted to start off just by saying to Julie, congratulations once again on your retirement and the last earnings call. It obviously has to be exciting. And it's been such a pleasure to work together since you took over as CEO .

Hey, Bob Hey, Bob.

I wanted to start off the spacing to Julie and congratulations once again on your retirement in the last earnings call, but it obviously has to be exciting and it's been such a pleasure to work together since you took over as CEO and.

Bob Lamek: And we've learned a ton from you, and I want to congratulate you on the extreme success of Helen of Troy and the transformation you led. We know the company is in good hands with Noelle and Brian and everyone else, so congratulations.

We've learned a ton from you and I want to congratulate you on the extreme success of Helen of Troy in the transformation you led and we know the company is in good hands with Noel and Brian and everyone else. So.

Gratulation.

Speaker Change: enjoyed it, and we'll hold it.

Georgia and California.

Speaker Change: Well, thank you very much, Bob. Very kind of you, and the company is in great hands, and I very much appreciate your comments.

Thank you very much Bob.

<unk> kind of view the company is in great hands and I very much appreciate your comments.

Speaker Change: Absolutely. So obviously, you know, in the last few months you've already given us a ton of information. It was a great Analyst Day, you know, recently.

Absolutely.

So obviously in the last few months, you've already given us a ton of information with a great analyst day recently and.

Speaker Change: I was hoping for my questions, I wanted to ask you for an update on Project Pegasus and milestones and expectations for Fiscal 25, maybe speaking a little about the regional marketing organization, new sales opportunities in Williams and White State.

Already giving guidance I was hoping for my questions. I wanted just to ask you for an update on project Pegasus and milestones and expectations for fiscal 'twenty five maybe speaking a little about the.

Regional marketing organization, new sales opportunities in wind and white space and I think next year is going to be kind of a question back to growth and so maybe talk about how we're set up in that regard how you're set up in that regard.

Speaker Change: And I think next year it's going to be kind of a question back to growth. And so maybe talk about how we're set up in that regard or how you're set up in that regard.

Speaker Change: Yeah, sure. Thanks, Bob. So, you know, as we mentioned in our remarks, Project Pegasus remains on on track and, you know, a couple of the areas that.

Yes sure Thanks, Bob.

So as we mentioned in our remarks project Pegasus remains on track and a couple of the areas that we touched on today and we've talked about in the last couple of quarters or some of the savings opportunities that came from this year and a lot of those were due to the one work stream that was around the reorganization and as you mentioned.

Speaker Change: you know, we touched on today and we've talked about in the last couple of quarters are some of the savings opportunities that came from this year. And a lot of those were due to the one work stream that was around the reorganization. And as you mentioned, you know, one of the things that I'm most

And one of the things that I'm, most excited about and those changes not only the efficiency, but also the effectiveness that they bring and one of the biggest choices that we made as part of <unk> in that regard with the North American retail market organization, where we created kind of a single selling organization across the.

Speaker Change: excited about in those changes are not only the efficiency, but also the effectiveness that they bring. And one of the biggest choices that we made as part of Pegasus

Speaker Change: in that regard was the North American Regional Market Organization, where we created kind of a single-selling organization across the company, where our folks calling on our various large customers see across the entire portfolio versus just one of the segments. And what that's really allowed them to do is, one, build

<unk>.

Our folks calling on our various large customers see across the entire portfolio versus just one of the segments and what that's really allowed them to do is one build bigger.

Speaker Change: you know, bigger joint business plans, more strategic relationships with those with those customers, but also identify some of the white space distribution opportunities, you know, looking for those places where we might have distribution of certain, certain of our products.

Bigger joint business plans more strategic relationships with us with those customers, but also identify some of the white space distribution opportunities you are looking for those places where we might have distribution of certain.

All of our products currently and others are not in distribution. So we can kind of sell across the portfolio or they might identify places where the category is developed and were not developed and we've got an opportunity to sell things in and we've already seen some.

Speaker Change: Currently, and others are not in distribution, so we can kind of sell across the portfolio, or they might identify places where the category is developed and we're not developed, and we've got an opportunity to sell things in. And we've already seen some success there. We've gotten into the dollar channel with some of our water filtration products. We've continued, we've gotten into

Some success there we've gotten into the dollar channel with some of our water filtration products.

We've continued we've gotten into.

Speaker Change: the mass, more mass channels with oxo that we've talked about and we'll continue to see more of that kind of growth. That's going to be one of our key levers as we get into fiscal 25 as some of those planograms come up. So that's a was a big part of sort of the efficiency that we saw in Pegasus in this year.

Yeah.

Mass more mass channels with OXXO that we've talked about and we will continue to see more of that kind of growth that that's going to be one of our key levers as we get into fiscal 'twenty five and some of those planet grants come out and so that was a big part of it.

The efficiency that we saw on Pegasus and this year as we go into next year, that's really where the bulk or the majority a bigger part of the savings come into play.

Speaker Change: As we go into next year, that's really where the bulk or the majority, a bigger part of the savings come into play.

Speaker Change: And that comes from some of the cost of goods initiatives that we saw. And again, we feel very good about those initiatives. They're on track. And that becomes the fuel that we can use to reinvest back in the business.

And that comes from some of the cost of goods initiatives that we saw and again, we feel very good about those initiatives are on track and that becomes the fuel that we can use to reinvest back in the business leveraging the new portfolio classification that we laid out and that's to grow stronghold and optimize so we really get a double benefit there.

Speaker Change: leveraging the new portfolio classification that we laid out, invest to grow, stronghold, and optimize. So we really get a double benefit there, right? We're able to invest the incremental fuel, but we're also doing it in a more focused way against the opportunities that we think are most appealing, best ROI, most attractive.

We were able to invest the incremental fuel, but we're also doing it in a more focused way against the opportunities that we think are most appealing that's ROI that's attractive.

Brian I don't know if there's anything else you want to build on.

Speaker Change: No, I would just say that when we give our outlook for fiscal 25, we'll we'll do our best to give you an idea of kind of the cadence of Pegasus savings that we expect over over the course of the year.

No I would just say that when we give our outlook for fiscal 'twenty five we'll we'll do our best to give you an idea of the kind of the cadence of peg us the savings that we expect over over the course of the year.

Speaker Change: Okay, great. And then just, you know, just to build on that a little bit, obviously, at the analyst that you mentioned, targeting investment.

Okay, Great and then just you know just to build on that a little bit obviously at the analyst day, you mentioned targeting investment in brands, increasing from 6% to 9% and then in a targeted way you. Just discussed has that started already or will that be kind of implemented as the savings come in.

Speaker Change: to 9% and then in the targeted way you just discussed. Has that started already or will that be implemented as the savings come in throughout next year and beyond?

Throughout next year and beyond.

Speaker Change: It's a great question. You know, I would say, as we commented, we already have started to lean in where we can, you know, there are a couple of places that we leaned in recently, you know, one was HydroFlask Travel Tumblr over the holiday season, where we offered personalization, complimentary personalization for consumers that did quite well. We also leaned into an opportunity we saw with Vick,

That's a great question I would say as we commented we already have started to lean in where we can.

You know there are a couple of places that we leaned in recently.

One was hydro flask travel tumbler over the holiday season.

We offered.

Personalization complementary personalization for consumers that did quite well, we also leaned into an opportunity we saw with the VIX.

Speaker Change: on Amazon, you know, VIX is a very strong market leader brand in brick and mortar, but a bit less, you know, bit less developed online. And so we really leaned in with some online marketing, online support and saw.

On Amazon VIX is a very strong market lead our brand in brick and mortar, but a bit less.

Bit less developed online and so we really leaned in with some online marketing online support and saw double digit increases in our performance there without seeing a depth in brick and mortar performance. So those are those are some of the areas that as we identify them. We've already started to lean into and we will continue to do more.

Speaker Change: double digit increases in our performance there without being a dip in brick and mortar performance so those are those are some of the areas that as we identify that we've already started to lean into and we'll continue to do more of that as we build our fiscal 25 here that you know the border.

Of that as we build our fiscal 'twenty five players and care of that.

In the coming quarter.

Speaker Change: OK, super. Congratulations, and thanks very much. I'll come back and see you.

Okay Super Congratulations and thanks, very much I'll jump back in queue. Thank you. Thanks, Bob.

Speaker Change: Our next questions come from the line of Peter Grom with UBS. Please proceed with your question.

Our next questions come from the line of Peter Grom with UBS. Please proceed with your questions.

Peter Grom: Thanks operator and good morning. Everyone Julian.

Thanks, operator, and good morning, everyone Julien.

Peter Grom: I want to say thank you for all the help and I wish you nothing but the best.

I want to say, thank you for all the help and I wish you nothing but the best in retirement.

Peter Grom: in retirement. So I wanted to ask.

So I wanted to ask.

Peter Grom: about the top line growth. Obviously, the return to growth continues to be delayed. But even kind of going back to the, you know, October , you know, earnings, there seemed to be a degree of confidence that we could still see a return to growth in the fourth quarter. And while you touch on the environment hasn't really changed and

The top line growth obviously, the return to growth continues to be delayed, but even kind of going back to the October earnings there seem to be a degree of confidence that we could still see a return to growth in the fourth quarter and nobody can touch on the environment Hasnt really changed.

Peter Grom: I know we will get to 25 guidance in April , but I guess, how does what you're seeing today in terms of consumer demand or retail ordering kind of inform your view on when we could actually see a return to growth?

No we will get to 25 guidance in April, but I guess, how does what youre seeing today in terms of consumer demand or a retail ordering kind of inform your view on when we could actually see a return to growth.

Peter Grom: Yeah, this is Brian . I mean, I might look at it maybe a little bit differently than you. I think if you draw drew a line between our or plotted our points of sales performance over the course of the year, I think there's a steady progression towards growth. And it kind of ends with the fourth quarter at the high end of our expectation at very slight growth for the fourth quarter. So I actually think it's a very

Yeah.

Yes. This is Brian.

I mean, I I might look at it may be a little bit differently than you I think if you draw drew a line between our or applauded our points of sales performance over the course of the year I think there is a steady progression towards growth and it kind of ends with the fourth quarter at the high end of our expectation.

Very slight growth for the for the fourth quarter. So I actually think it's a very consistent and the real.

Peter Grom: a consistent and a reliable, I would say, path towards growth.

Viable I would say.

Path towards growth and very much in line with our expectations. We did adjust our a range on the high end down slightly and up on the bottom end of the range slightly for the fourth quarter and I would just view that as a fine tuning and narrowing and we explained the reasons why we did that I mean, we had a slightly softer.

Peter Grom: And in very much in line with our expectations, we did adjust our.

Peter Grom: A range on the high end down slightly and up on the bottom end of the range slightly for the fourth quarter. And I would just view that as a fine tuning and narrowing. And we explain the reasons why we did that. I mean, we had a slightly softer holiday season and we're projecting now at this point, lower overall illness for the full whole flu season versus the cold flu season.

Our holiday season and.

We're projecting now at this point lower overall illness for before cold flu season versus a inline level of incidents in the same period last year. So in my mind nothing really much has changed from outlook that we gave in Q3 and I still feel were very much on track.

Peter Grom: a in-line level of incidence in the same period last year.

Peter Grom: So, in my mind, nothing really much has changed from the outlook that we gave in Q3, and I still feel we're very much on track.

Peter Grom: And we are targeting growth for fiscal 25 can't tell you exactly what that looks like until we do all the work that we're doing that that goes into that but but very much targeted and we feel it's achievable over time or we wouldn't have provided or long term outlook that that has growth.

And we are targeting growth for fiscal 'twenty five can't tell you exactly what that looks like until we do all the work that we're doing that.

And that goes into that but very much targeted and we feel it's achievable over time or we wouldn't have.

Our long term outlook that that has growth.

Speaker Change: No, that's super helpful, Brian . I guess just maybe a quick follow-up on the cough cold flu commentary. Obviously, maybe gotten off to a slower start, but can you maybe help us understand, you know, how much of a, like when you think about

No that's super helpful. Brian I guess, just maybe a quick follow up on the cough cold flu commentary obviously.

Maybe gotten off to a slower start but can you maybe.

Help us understand how much of it like when you think about the marginal changes to guidance I mean, how much of the weaker season is having on the outlook and I guess.

Brian Grass: the marginal changes to guidance. I mean, how much of the weaker season is having on the outlook? And I guess.

Brian Grass: Should illness incidences pick up, which at least it seems like around me they have, could this be a source of upside versus your guidance from here? I'm just trying to understand the degree of visibility kind of where we are today as it pertains to cough, cold and flu. Thanks.

Should illness incidents pick up which at least it seems like.

Around EMEA.

Could this be a source of upside versus your guidance from here I'm just trying to understand.

A degree of visibility you kind of where we are today as it pertains to cough cold and flu.

Yes sure Peter.

Speaker Change: I, yes, you know, what I would say is what we look at is, you know, the data as it comes in and both November and December were meaningfully below the prior year in terms of the illness levels.

I, Yes, I you know what I would say is what we look at is.

The data as it comes in and both November and December were meaningfully below the prior year in terms of the illness levels.

Speaker Change: And as you noted, and I noted in my prepared remarks, we feel like we're hearing about it in the news quite a bit, and it is in the news quite a bit.

And as you noted and I noted in my prepared remarks.

We feel like we are hearing about it in the news quite a bit and it is in the news quite a bit.

Speaker Change: that there's no doubt about that. But the reality is in really all cases, including COVID, which we're hearing a lot about, it's below.

That there is no no no doubt about that but the reality is.

Really all cases, including Covid, what we're hearing a lot about it's below.

Speaker Change: prior year levels. Now, if that changes and things accelerate, that could be an upside.

Prior year level now if that changes and then accelerate that that could be an upside to our to our fourth quarter, but it all depends on the severity and it depends on the timing of that because he's got a it's got to happen fairly quickly in order for it to make a meaningful impact to our fourth quarter and that's why we.

Speaker Change: to our fourth quarter, but it all depends on the severity and it depends on the timing of that because it's gotta happen fairly quickly in order for it to make a meaningful impact to our fourth quarter. And that's why we made the adjustment that we did in our outlook.

We made the adjustment that we did in our outlook.

Got it thanks, so much I'll pass it on.

Thank you next.

Speaker Change: The next question is from the line of Olivia Telln with Raymond Chain.

The next question is from the line of Olivia Tong with Raymond James. Please proceed with your questions.

Olivia Telln: Great. Thanks. Good morning and best of luck Julian with all that you have planned going forward and it's been great with you

Great. Thanks, Good morning, and best of luck Julien with them, all but you have plans going forward and it's been great.

[laughter].

Thank you.

Speaker Change: My first question is really around sort of visibility, you know, you mentioned in the commentary towards Peter about the, you know, sort of steady improvement through the year. You know, we kind of look at this and, you know, sort of think about this year's performance versus last year.

My first question is really around sort of visibility.

And in the commentary towards Peter about the you know sort.

Sort of steady improvement through the year.

We kind of look with Jason and sort of think about this year's performance versus last year.

Speaker Change: you know, there have been obviously a couple of different fits and starts with respect to that. But, you know, maybe just boiling it down in terms of your view on visibility as you head into as you finish up this year, head into next year, you mentioned that retail inventory.

Theres been obviously, a couple of different fits and starts with respect to that but.

Maybe just boiling it down in terms of your view on visibility as you head into as you finish up this year heading into next year, you mentioned that retail inventory.

Speaker Change: are in a better place in terms of sell-in versus sell-through, you know, do you think the de-stocking is done, you know, as you think about next year and some of the innovation plans for next year and reflect on, you know, the Cumber launch, where you are with respect to that, if you could just talk a little bit about some of the building blocks there, that would be helpful as we think about, you know, finishing and tying the bow on this year and embarking on next year. Thanks.

Are in a better place in terms of selling versus sell through.

Thank the Destocking is done.

You know as you think about next year and some of the innovation plan for next year.

And reflect on the <unk> launch, where you are with respect to that if you could just talk a little bit about some of the building blocks. There that would be helpful. As we think about you know kind of.

Tying a bow on this year and embarking on next year. Thanks.

Speaker Change: Yeah, so, you know, as we think about fiscal 25, it's really it's year one of elevate for growth.

Yeah. So.

We think about fiscal 'twenty five its really its year one of elevate for growth.

Speaker Change: And so when as we're you know we're in the process of pulling together those plans now we have some pre budget meetings in December and then we'll continue that process.

And so when we're in the process of pulling together those plans now we had some pre budget meetings in December and then we will continue that process.

Speaker Change: later this month and February before we kind of provide our full.

Later this month in February before we provide our full.

Speaker Change: you know, full look for next year. But, you know, the things that are on my mind are very similar to what we discussed in the October Investor Day. The first is, and I mentioned it in my prepared remarks, kind of really clear, sharpened brand equities to set the foundation.

We'll look for for next year, but the things that are on my mind, a very similar to what we discussed in the October Investor Day. The first is and I mentioned in my prepared remarks kind of really clear sharpen the brand equity is to set the foundation and then this new portfolio classification strategy that we talked about so that we can really focus.

Speaker Change: And then this new portfolio classification strategy that we talked about so that we can really focus.

Speaker Change: our investment and our resources against those opportunities that we think have the best.

Investment in our resources against those opportunities that we think have the.

Speaker Change: ROI and the best chance for driving growth fueled by the incremental investment that we will put behind it through Project Pegasus that will really start to kick in. As I mentioned, we kicked in a little bit of it this year, but a lot of the Project Pegasus efficiencies this year offset some of the headwinds that Brian talked about, the AIP, the interest expense, etc. So next year, we really have more opportunity to invest back into the business.

The best ROI and the best chance for driving growth fueled by the incremental investment that we will put behind it through project Pegasus that will really start to kick in as I mentioned, we kicked in a little bit of it this year, but a lot of the project peg a sufficiency Pegasus efficiency this year offset some of the headwinds that <unk>.

<unk> talked about the the AIP the interest expense et cetera. So next year, we really have more opportunity to invest back into the business and then another key lever that I mentioned to Bob earlier as the expanded distribution. We've seen a couple of those wins that have already come in this fiscal year, but I expect more of that kind of white space.

Speaker Change: And then another key lever that I mentioned to Bob earlier is the expanded distribution. We've seen a couple of those wins.

Speaker Change: that have already come in this fiscal year, but I expect more of that kind of white space distribution closing to be a significant lever for us in fiscal 25.

Distribution closing to be a significant lever for us in fiscal 'twenty five.

Speaker Change: So those those would be some of the things that that I think are going to be important drivers. Of course, we also have an innovation pipeline as we do each and every year. We'll, we'll bring out some great new products as well. So all of those aspects.

So those are those would be some of the things that I think are going to be important drivers of course, we also have an innovation pipeline as we do each and every year, we'll bring out some great new products as well so all of those aspects.

Speaker Change: are what bring the confidence that Brian and I have on.

During the confidence that that Brian and I have on what we shared at the Investor day, and kind of year, one developing for growth in fiscal 'twenty, five and you want to build on Brian. So it's good.

Speaker Change: what we shared at the investor day and kind of year one of Elevate for growth in fiscal 25.

Speaker Change: Got it. And then, I know, you know, an analyst there, you had mentioned some, you made some discussion on M&A, looking at divesting, also looking at acquiring. If you could give us an update on that, and then also, would you, you know, your debt, obviously, the leverage profile has improved through the year. Would you look at buying something before selling something, or is your preference to sort of match those as much as possible? Yep.

Got it and then I know you know at Analyst Day, you had mentioned.

So you made some discussion on M&A looking at divesting also looking at acquiring them.

If you could give us an update on that and then also would you.

You probably see the leverage profile has improved through the year, what do you look at buying something before selling something or.

Is your preference to sort of match those isn't as much as possible.

Yes, let me add this is Brian I'd say there is activity going on in both of the areas. I've mentioned of course activity doesn't always mean that there's something imminent or anything like that but I would say we are we're putting effort behind both potential divestiture and potential acquisition.

Speaker Change: Activity going on in both of the areas as mentioned, of course, you know, activity doesn't always mean that there's something imminent or or anything like that. But I would say we're, we're putting effort behind.

Speaker Change: both potential divestiture and potential acquisition. And I agree with the comments about the leverage ratio coming down. I don't think we would need to do divestiture at this point before we consider doing acquisition. I think acquisition is available to us and sometimes these processes take quite a bit of time to execute and so we have even more time really honestly to de-lever before

And.

I agree with the comments about the leverage ratio coming down we I don't think we would need to do divestiture at this point before we consider doing acquisition I think acquisition is available to us and sometimes these processes take quite a bit of time to execute and so we have even more time really honestly.

Delever before.

Speaker Change: you know, getting to the end of a transaction.

Getting to the end of the transaction so.

Speaker Change: I and the other comment I'll make is I think in this environment.

And the other comment I'll make is I think in this environment some.

Speaker Change: Some people might view interest rates as being a barrier to completing acquisition. And while we have to be aware of interest rates on our end, I think we look at things maybe a little bit more strategically. And I kind of actually view the environment with lower multiples because of interest rates as more of an opportunity than a barrier. I think it gives us the opportunity to find quality assets that low valuations. And so we're really looking to maybe try and take advantage of that.

Some people might view interest rates as being a barrier to completing acquisition and while we have to be aware of interest rates on our end I think we look at things, maybe a little bit more strategically and I kind of actually the beauty environment with lower multiples because of interest rates is more of an opportunity than a barrier I think he.

It gives us the opportunity to find quality assets at low valuations and so we're really looking to maybe try and take advantage of that.

Speaker Change: and get something for good value.

And get something for good value.

Speaker Change: The only build I would make is, you know, our approach.

Only build I would make is our approach to acquisitions remains consistent the discipline and the criteria that we use the better together is key so as Brian said.

Speaker Change: to acquisition remains consistent, right? The discipline, the criteria that we use, the better together is key. So as Brian said, we have gotten our debt to a place where we can be even more.

We have gotten our debt to a place where we can be even more.

Speaker Change: interested in what is out there, and we continue to look for what's available, but also things that we might be interested in that may not be on the market, like we did with Osprey, to see if there's something that we think is a great strategic fit.

Interested in what is out there and we continue to look for what's available, but also things that we might be interested in it may not be on the market like we did with osprey to see if there's something that we think is a great strategic fit.

Got it thanks, so much.

Speaker Change: Our next question comes from the line of Linda Bolton-Weiser with D.A. Davidson.

Our next question comes from the line of Linda Bolton Weiser with D. A Davidson. Please proceed with your questions.

Linda Bolton-Weiser: Yes, hello. So I was wondering if you could comment on the hair appliance category. So you mentioned you're kind of gaining market share, but maybe the whole category is not so good. And it seems like Dyson is doing some nice innovation and things. I guess probably at the higher end. Can you just comment on Dyson's influence in the category and just what you think the category needs in order to get it kind of growing a little bit better?

Yes Hello.

So I was wondering if.

You could comment on the hair appliance category. So you mentioned youre kind of gaining market share, but maybe the whole categories that so good.

It seems like dice and is doing some nice innovation and things like that is probably at the higher end can you just comment on licensed influence in the category and just what you think the category needs in order to get it kind of growing a little bit better. Thanks.

Speaker Change: Yeah, sure. Thanks. Good to hear from you, Linda. So here's what I would say on hair tools.

Yes sure. Thanks, good to hear from you Linda.

So here's what I would say on hair tools.

Linda Bolton-Weiser: When I look at the category in total, especially over the holiday period, the part of the category that's kind of 199 and lower, you know, of price points.

Yeah.

I look at the category in total, especially.

Especially over the holiday period, the part of the category Thats kind of a 199% lower.

Yeah.

Linda Bolton-Weiser: is not performing as well. It's the higher end, which is, you know, what, as you're calling out, or Dyson is playing, that is performing better. We, you know, we play more in the $199 and below part of the category today. A few items that may be above that, but for the most part, we're in that $199 and below.

<unk> points is not performing as well, it's the higher end, which is.

As you are calling out the data centers, playing that is performing better.

We we play more in the 199 and below part of the category today, a few items that may be above that but for the most part we're at $999 and below.

Linda Bolton-Weiser: What we're seeing is, and I've mentioned this in a couple of the earnings calls,

What we're seeing is and I've mentioned this in a couple of the earnings call.

Linda Bolton-Weiser: you know, we work to broaden our assortment across this year in our hair tools to make sure that we have the full range, so not just the

We worked to broaden our assortment across this year and in our hair tools to make sure that we have the full range. So not just the.

Linda Bolton-Weiser: you know, the higher end of that $199, but also some of the entry price point, hair dryers, curling iron, straighteners, you know, et cetera. And that has.

The higher end of that $199, but also some of the entry price.

Price point, Hairdryers curling iron Straighteners et cetera, and that has made a positive impact for us in sort of that math class of trade, where we're seeing share improvement now that we've gotten out assortment broadens again as we mentioned in the remarks holiday for us Unhair tools in.

Linda Bolton-Weiser: made a positive impact for us in sort of that mass class of trade where we're seeing share improvement now that we've gotten that assortment broadened again. As we mentioned in the remarks, holiday for us.

Linda Bolton-Weiser: on hair tools in particular was softer than we anticipated. And it really kind of came down to that category of the 199 and less not performing as well in the holiday period. In terms of what it's gonna take, it's gonna take, you know, it's really the fundamentals. It's really making sure that we've got.

<unk> was softer than we anticipated and it really kind of came down to that category of the 199 and last not performing as well and the holiday period in terms of what it's going to take it's going to take.

It's really the fundamentals.

Really making sure that we've got.

Linda Bolton-Weiser: great innovation that addresses consumers' needs, you know, whether it's for their pain points or whether it's the opportunities to, you know, save them time, get a better result.

<unk> innovation that addresses consumers' needs.

It's for their pain points are whether it's the opportunities to.

To save them save them time get a better result, et cetera, and the right claims and marketing to reach them when and where they are most receptive and that's certainly part of the activity of a plan that our team has as we move forward into fiscal 'twenty five.

Linda Bolton-Weiser: et cetera, and the right claims and marketing to reach them when and where they're most receptive. And that's certainly part of the activity and plans that our team has as we move forward into fiscal 25 to continue to do that. We've done that very well in the past.

You do that we've done that very well in the past.

Linda Bolton-Weiser: But, you know, Volumizer was a ringing success for us from an innovation standpoint. So we know how to do it. We know how to understand consumers' needs and build those opportunities. And that's exactly what the team is focused on doing.

Volume either.

Ringing.

Success for us from an innovation standpoint, so we know how to do it we know how to understand consumers' needs and build those opportunities and thats exactly what the team is focused on doing.

Thanks, and then.

Speaker Change: I just wanted to ask, I mean, you talked quite a bit about the flu season and everything, but certainly in China, they're going through a first post-COVID flu season, so it's been very severe in China. And I understand, you mentioned in the past, the brown thermometers do very well online in China. Is that a source of strength right now? Are you seeing growth in that part of your portfolio?

I just wanted to ask I mean.

Quite a bit about the flu season and everything but.

Certainly in China, Theyre going through a first post COVID-19 flu season. So it's been very severe in China and I understand you mentioned in Nebraska, Braun thermometers, Youre very well online in China is that a source of strength right now or are you seeing growth in that in that part of your portfolio.

Speaker Change: We are, Linda. You're exactly right. We are seeing a higher level of illness in China right now, and our brawn business, which is quite developed outside of the U.S. in both Europe and Asia, and we are growing very nicely in the absolute based on just the trends that you're calling out, as well as our share performance is growing in that part of the business. An interesting phenomenon that we're seeing over there is

We are Linda.

Right, we are seeing a higher level of illness in China right now.

And our branch business, which is quite developed outside of the U S.

In both Europe, and Asia, and we are growing very nicely in.

And the absolute based on just the trends that you are calling out as well as our share performance is growing in that part of the business.

Interesting phenomenon that we're seeing over there is during COVID-19. There was a really big run up in the no touch portion of thermometer that at that point people are really kind of looking to get whatever some amateur they could and a lot of no touch the monitors were sold.

Speaker Change: During COVID, there was a really big run up in the no touch portion of thermometers. At that point, people were really kind of looking to get whatever thermometer they could. And a lot of no touch thermometers were sold.

Speaker Change: Since the pandemic has ended, consumers there have kind of come to the realization that they're a lot less accurate than the EAR thermometers are, and we're seeing a lot of backlash on that as we monitor social media, we monitor ratings and reviews, et cetera, and they're coming, you know, really coming to the EAR thermometer driven by the accuracy, and then you layer on top of that the strength of the Braun brand and the trust that consumers have in it, it's really making for a winning combination. That's a very bright spot.

Since the pandemic has ended consumers there have kind of come to the realization that there are a lot less accurate than the erythromycin Butters are and we're seeing a lot of backlash on that as we monitor social media and we monitor ratings and reviews, etc, and they are coming really coming to the erythromycin or driven by the accuracy and then you lay.

On top of that the strength of the Braun brand.

And the trust that consumers have in it its really making for a winning combination.

That's a very bright spot for sure in the business.

Speaker Change: Thanks, and then just my last question is on Hydro Flask.

Thanks, and then just my last question.

<unk> is on hydro flask.

Speaker Change: Just what is the root of why it is performing so much better online than in brick and mortar? And then finally, I just want to say farewell as well to Julian. Julian, it's been a pleasure working with you. I've learned so much. And best of luck with everything.

Just.

Just why what what is the root of why it is performing so much better online than in brick and mortar and then and then finally I just wanted to say farewell as well too to Julien Julien it's been a pleasure working with you I've learned so much and best of luck with everything.

Thank you Linda.

Speaker Change: So on Hydro Flask, here's what I would say.

So on hydro flask Monday here, here's what I would say.

Speaker Change: You know, I mean, I think as one of the reasons I think it performed better online than in brick and mortar, is that the whole holiday trend went to online more than brick and mortar. We were looking at, you know, some syndicated studies, et cetera. And you really see brick and mortar traffic over the holidays down overall and down more in December than it was in November . And so I just, I think this was a holiday season that really skewed more online than in brick and mortar.

I mean I.

Thank you.

One of the reasons I think it performed better online than in brick and mortar is that the whole holiday trend went to online more than brick and mortar.

We were looking at some syndicated studies et cetera, and you really see brick and mortar traffic over the holidays down overall and down more in December than it was in November and so I think this was a holiday season that really skewed more online than than in brick and mortar and most and most.

Speaker Change: in most categories and in most cases. And then, as I mentioned, this was a place that we leaned into. You know, the travel to Tumblr did well. We continued to see that shift from bottles to Tumblrs. And so that was an area that we really leaned into, both with retail partners online, but also on our own D2C site. We saw really significant increases in the personalization over the holiday period on Hydro Flask. And so I think that those...

Categories and in most cases, and then as I mentioned this was a place that we leaned into it.

Traveled to Tumblr.

It did well we continue to see that shift from bottles tumblers and so that was an area that we really leaned into <unk>.

Both with retail partners online, but also on our own DTC side, we saw really significant increases in the personalization.

Over the holiday period on hydro flask, and so I think that those.

Speaker Change: extra offerings, you know, really made the online side of it perform well.

Extra offerings really made the online side of it performed well.

Thank you.

Youre welcome.

Speaker Change: Our next questions are from the line of Susan Anderson with Mechanical Ingenuity. Please receive your questions.

Our next questions are from the line of Susan Anderson with Canaccord Genuity. Please proceed with your question.

Speaker Change: Hi, good morning, Alec Legon for Susan. First, we just wanted to share our congratulations as well to Julian and all of your successful work and your long career at Helen. And Noel, we're also very excited to see you execute the next step of Helen of Troy story.

Hi, good morning, Alex leg on for Susan Firstly, I, just wanted to share congratulations as well to Julian and all of your successful work and your long career at <unk>.

And no. We're also very excited to see you execute the next step of Helen of Troy story.

Speaker Change: My question just on the gross margins in the quarter and longer term, for this quarter how much was driven by lower inbound freight versus the ski rationalization and then looking forward how should we expect gross margins to play out between the two buckets? Thank you.

My question just on the gross margins in the quarter and longer term.

For this quarter, how much was driven by lower inbound freight versus the SKU ration rationalization and then looking forward how should we expect gross margins to play out.

Between the two buckets. Thank you.

Yes, it does.

Speaker Change: We've not really broken out or parsed out publicly the specific impacts from SKU-RAT versus some of the other factors.

We've not really broken now parsed out publicly the specific impacts from from SKU rat versus the other some of the other factors but.

Speaker Change: But there is a meaningful impact year over year, starting to get less and less as we anniversary quarters.

There is a meaningful impact year over year, starting to get less and less as we anniversary quarters.

Speaker Change: Of inbound freight reduction, so I would say more pronounced at the beginning of the year on that, and then becoming less and less over the course of the year. So, you know, probably still meaningful, but less meaningful than it had been. And maybe you want to queue to. Very meaningful impact that that, you know, we.

Inbound freight reduction so I would say more pronounced at the beginning of the year on that and then becoming less and less over the course of the year. So.

Probably still meaningful but less meaningful than it had been in maybe Q1 and Q2 SKU rat very meaningful impact that that you know we.

Speaker Change: We expect to continue to do in smaller degrees as we go forward, this was a kind of a fresh look at it as we went through project Pegasus and and so you know I don't want people to expect.

We expect to continue to do in in smaller degrees as we go forward. This was a kind of a fresh look at it as we went through project Pegasus and so I don't want people to expect.

Speaker Change: You know, the kind of revenue impact that we had going into this year from it, but we did that because we could get the meaningful profit impact that you're now seeing in gross profit margins. So we felt like the juice is worth the squeeze hopefully going forward.

The kind of revenue impact that we had going into this year from it.

But we did that because we could get the meaningful profit impact that you are now seeing in gross profit margins. So we felt like the juice is worth the squeeze hopefully going forward.

Speaker Change: The, the amount that impact that we'll have on revenue will be less and less, but we'll still be able to get some of that profit drive that you saw.

The amount that will impact that will have on revenue will be less and less but we'll still be able to get some of that profit drive that you saw over the course of this year. So hopefully that gives you some directional.

Speaker Change: Over the course of this year, so hopefully that gives you some directional answer to your question without specifics. I would say they're both.

Answer to your question without specifics I would say, they're both fairly meaningful.

Speaker Change: fairly meaningful in Q3.

In Q3.

Speaker Change: Got it. That's pretty helpful. And then on the top line. So sales came in ahead of guidance. I guess what was there anything that changed during the quarter that led to better top line sales in the quarter and then also the narrowing of top line for the rest of the year.

Got it that's pretty helpful. And then on the top line. So sales came in ahead of guidance I guess, what was there anything that changed during the quarter that led to better topline sales in the quarter and then also the narrowing of top line for the rest of the year.

Speaker Change: No, I'd say nothing specific. I'd say just strong execution.

No I would say nothing.

Specific I'd say, it's a strong execution.

Speaker Change: Taking advantage of our opportunities, we mentioned the two bright spots I would call out, and Noel will probably elaborate, is the areas where we leaned in into from a marketing spend perspective. We really leaned into Hydro Flask and drove good online.

<unk> taken advantage of our opportunities we mentioned the two bright spots I would call out in the world probably elaborate is the areas, where we've leaned in into from a marketing spend perspective, we really leaned into hydro flask.

Good online.

Speaker Change: Sales there with free engraving and some other activities, you know, higher marketing spend and things like that. And then on VIX, we really leaned into the cold flu season and really driving sales online. I'd say those are the two.

Sales, there with free engraving and some other activities.

Higher marketing spend and things like that and then on VIX, we really leaned into the cold flu season, and really driving sales online I would say those are the two of the larger things that that kind of drove over slight over performance in the quarter versus our expectations. The other I called out in the prepared remarks, OXXO with a real stand.

Speaker Change: of the larger things that that kind of drove over slight overperformance in the quarter versus our expectations.

Speaker Change: Yeah, the other I called out the preparator mark. Oxo was a real standout in the quarter. You know, if you take out the bed bath and beyond bankruptcy, really strong point of sale across.

Out in the quarter.

Take out the bed Bath and beyond bankruptcy really strong point of sale across the board.

Speaker Change: the board growing share in that four kitchen utensil segment. So OXA was a was a bright spot and Osprey continues to perform well. We continue to see the strong travel demand.

<unk> share on that or kitchen utensils segments. So OXXO was up was a bright spot and osprey continues to perform well we continue to see the strong travel demand.

Speaker Change: better inventory position than we had a year ago, and really growth across all of the different portions of the business. Obviously, there's the tech path that is.

Better inventory position than we had year ago, and really growth across all of the different portions of the business. Obviously the tech pack that is the heritage of the brand, but also nice growth in travel and Duffle and lifestyle.

Speaker Change: heritage of the brand, but also nice growth and travel and duffle and lifestyle, you know, as we extend that brand across. And then I mentioned international. International was a bright spot, both with Braun and Osprey.

As we extend that that brand across and then I mentioned International International was a bright spot both with Brian and Osprey.

Thank you so much.

Youre welcome.

Speaker Change: Our next question is from the line of Rupesh Parikh with Oppenheimer. Please proceed with your question.

Our next question is from the line of her pest Perique with Oppenheimer. Please proceed with your questions.

Rupesh Parikh: Good morning and thanks for taking my question and also Julian, best of luck with your retirement.

Good morning, and thanks for taking my question and also with Julian and best of luck with your retirement.

Speaker Change: So just to follow up on the last question just on gross margin, Brian , I'm not sure if you can give any updated expectations for how you think about gross margins in Q4.

So just to follow up on the last question just on gross margin and Brian I'm not sure. If you can give any update or expectation for how you think about gross margins in Q4.

Brian Grass: I would say you could expect similar to Q3 with slight maybe expansion off of Q3.

I would say you could expect a similar to Q3 with slight maybe expense expansion off of Q3.

Speaker Change: Okay, that's helpful. And then as we think about gross margins, you're now in that, you know, 48% plus.

Okay. That's helpful. And then as we think about gross margins you are now not.

48% plus range is that a therapy. So that you can build off of going forward is this like the new steady state to think of an on going forward, maybe theres still opportunity expansion from here.

Speaker Change: Is that a fair base that you can build off of going forward? Is this like the new steady state to think of? And then, you know, going forward, maybe there's still an opportunity to expand.

Speaker Change: Well, I think it's a fair base to build off of, assuming there's not, you know, significant exogenous changes in commodity or freight costs. And then, yeah, I think we build off of it with Pegasus savings that we're expecting in fiscal 25, which is largely cost of goods sold focused.

Well I think it's a fair base to build off of assuming theres not significant exogenous changes in commodity or freight costs.

And then yes, I think we have to build off a bit with peg us the savings that we're expecting in fiscal 'twenty, five which is largely cost of goods sold focused.

Speaker Change: And the only build I would have on that is you also get kind of the brand portfolio classification benefits. So as we put more Invest to Grow sales into the mix, that's also a help over time. So remember, now that we've classified them, as we put the incremental and Pegasus investment, we're going to focus it more on those brands that are in Invest to Grow, and those are the higher.

And the only build I would have on that is it.

You also get kind of the brand portfolio classification benefit so as we put more invest to grow.

Sales into the mix. That's also a help over time. So remember we you know we've now that we've classified them as we put the incremental impact of sits investment we're going to focus it more on those brands that are in investor grow and those are the higher.

Speaker Change: You know, the higher margin brands in the portfolio. Yeah, that's a good point. I would say for fiscal 24, we actually.

The higher margin brands in the portfolio, yes, that's a good point.

Say for fiscal 'twenty, four we actually sort of underachieved on gross profit margin versus our expectations because we.

Speaker Change: sort of underachieved on gross profit margin versus our expectations because we.

Speaker Change: weren't able to achieve the mix that Noelle, or to the degree that we would like that Noelle is talking about, we do see the opportunity to do that in fiscal year 25. So I would say, you know, our base wasn't quite where we wanted it to be for this fiscal year, but we feel like we can get it to where it needs to be going forward.

We werent able to achieve the mix that noelle is where to the degree that that we would like that well is talking about we do see the opportunity to do that in fiscal year 'twenty five so I would say our base wasn't quite where we wanted it to be for this fiscal year, but we feel like we can get it to where it needs to be going forward.

Speaker Change: great and then i i get my follow-up question so if you look at the holiday season uh... interpret rand like is it you know if you look at November December discursive decayed into trying to look at some of the p o s data and then from a promotional backdrop perspective just here's how that played out versus our your

Great and then my I guess my follow up question. So as you look at the holiday season.

In terms of trends.

If you look at November December just curious the cadence of trends as you look at some of the POS data and then from a promotional backdrop perspective, just curious how that played out versus your expectations.

Speaker Change: Yeah, so holiday performance for us through PESH, you know, I would say broadly was in line with what we're seeing in general consumer spending trends. So Oxxo and Osprey performed well, and that kind of matches the entertainment travel focus of where consumers are spending, you know, those discretionary dollars more than other, you know, other places.

Yes, so holiday performance rest of Apache.

Say broadly was in line with what we're seeing in general consumer spending trends, so OXXO and osprey performed well in that kind of matches the entertainment travel focus of where consumers are spending.

It's discretionary dollars more than other other places as.

Speaker Change: As we mentioned, Hydroflask performed well online, and the hair tools performance was a little bit softer. We've got, those are probably the parts of our portfolio that are most holiday exposed. We've obviously got the big illness.

As we mentioned hydro performed well online and.

<unk> performance was a little bit softer we've got those are probably the parts of our portfolio that are most holiday expose we've obviously got the big illness portion of our portfolio that we've touched on during the call today. So not everything is holiday relevant if you will.

Speaker Change: Portion of our portfolio that we've touched on during the call today. So not everything is holiday relevant. If you will, what was the last.

Well. This is the last part of your question.

Speaker Change: Just on the promotional backdrop? Yeah, promotional backdrop. Promotional backdrop. Yeah.

Just talk.

Gotcha, yeah promotional about promoters.

Speaker Change: Yeah, you know, I would say, I would say we didn't see anything hugely unusual. What I would say across holiday in general is that it started earlier.

Yeah, I would say I would say, we didn't see anything hugely an unusual what I would say across holiday in general isn't it started earlier.

Speaker Change: So we saw retailers, you know, starting to offer some of their, you know, better deals, you know, not, not waiting all the way to Black Friday, but starting to kind of lean into it a bit earlier in the season, but not dramatically different.

So we saw retailers starting to offer some of their better deal not not waiting all the way to black Friday, but starting to kind of lean into it a bit earlier in the season.

But not dramatically different levels of activity and discounts and as I look at our portfolio.

Speaker Change: levels of activity and discounts. And as I look at our portfolio, you know, not meaningfully

Not meaningfully different or deeper areas I've mentioned, a couple of things that we did on hydro flask is a really competitive category, we offered the pretty customization.

Speaker Change: Different or deeper areas. I've mentioned a couple things that we did on hydro flask is a really competitive category. We offered the free customization You know, we had some some of the kind of typical offers that we would have online. We had a an offer on some Special items, you know special colors that we brought back and things like that, but in general not a direct dramatic difference year-on-year and in what we did promotionally

You know we have some some of the kind of typical offers that we would have online we had.

An offer on some.

Special items special colors that we brought back and things like that but in general not a.

Dramatic difference year on year end and what we did promotional.

Great. Thank you for all the color of possible.

Speaker Change: At this time, we've reached the end of the question and answer session, and I'll turn the call over to Noel for closing remarks.

Thank you at this time, we've reached the end of the question and answer session I'll turn the call over to Noel for closing remarks.

Noel: Great. Thank you. And thank you, everyone, for joining us today and for your continued interest in Helen of Troy. We look forward to speaking with many of you over the next two days at ICR, as well as virtually at the CJS conference on Wednesday. And I hope everyone has a great day.

Great. Thank you and thank you everyone for joining us today and for your continued interest in Helen of Troy, We look forward to speaking with many of you over the next two days at ICR is wells virtually at the C. J F Conference on Wednesday, and I Hope everyone has a great day.

Speaker Change: This will conclude today's conference. You may disconnect your lines at this time. We thank you for your participation.

This will conclude today's conference you may disconnect your lines at this time and we thank you for your participation.