Good day everyone and welcome to the Helen of Troy Limited First Quarter 2018 Earnings Call. Today’s conference is being recorded. At this time I would like to turn the conference over to Jack Jancin, Senior Vice-President Corporate Business Development. Please go ahead.

Thank you, operator. Good morning everyone, and welcome to Helen of Troy’s first quarter fiscal 2018 earnings conference call. The agenda for today’s call is as follows. I’ll begin with a brief discussion of forward-looking statements. Mr. Julien Mininberg, the Company’s CEO, will comment on the financial performance of the quarter and specific progress on our strategic initiatives. Then Mr. Brian Grass, the Company’s CFO, will review the financials in more detail and comment on the Company’s outlook for fiscal 2018. Following this, Mr. Mininberg and Mr. Grass will take your questions you have for us today. 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. Forward-looking statements are subject to a number of risks and uncertainties that could cause anticipated results to differ materially from actual results. This conference call may also include information that may be considered non-GAAP financial information. These non-GAAP financial measures are not an alternative to GAAP financial information and may be calculated differently than the non-GAAP financial information disclosed by other companies. The company cautions listeners not to place undue reliance on forward-looking statements or non-GAAP information. Before I turn the call over to Mr. Mininberg, I’d like to inform all interested parties that a copy of today’s earnings release has been posted to the company’s website at www.hotus.com. 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 home page, and then the news tab. I will now turn the conference call over to Mr. Mininberg.

Thank you, Jack. And good morning, everyone, and thanks also for accommodating the earlier time for our call today. This allowed us to respect the July 4th holiday and to attend tomorrow’s CJS Investor Conference in New York. We’re very pleased to report a solid start to our current fiscal year including net sales revenue growth of 3.4% and adjusted diluted EPS growth of 7.9%. We believe this reflects the strategic choices in the transformation plan that we first shared with you in May of 2015. Importantly, the focus on our leadership brands that we discussed on our last call is having a positive impact. Core business net sales for these brands increased over 8% in the first quarter adding in the incremental half month of contribution from the Hydro Flask acquisition. Net sales for this group of brands grew just under 12%. Further, we grew share in four out of the five brands for which U.S. third party syndicated data is available. The quarter was led by our Houseware segment where both the Hydro Flask and OXO brands grew sales by a combined 16.3%. Health & Home grew core business net sales 3.4% and improved its profitability. In Beauty, core business net sales declined 1.4% overall better than our expectations as we saw growth in both our retail and professional appliances. In Nutritional supplements, quarterly revenue was down 12% due to some disruption after we transitioned to new system platforms. While we are not at all satisfied with that decline, we believe we have now past many of the system transition challenges. Also, as described in this morning’s press release, we recorded a $32 million pretax non-cash impairment charge in the nutritional supplement segment. However, this does not diminish the significant work we have done and will continue to…

Thank you, Julien. Good morning everyone. We are pleased to report an increase in adjusted diluted EPS of 7.9% in the first quarter, driven by solid growth in consolidated sales revenue, improved operating efficiency, favourable tax benefits year-over-year and lower diluted shares outstanding. We achieved this growth even as we executed on our stated goal of investing behind the leadership brands, through increased promotion, marketing, advertising and new product development. Turning to a more detailed review of the quarter, consolidated sales revenue was $359.6 million for the quarter, a 3.4% increase over the prior year period driven by an increase in our core business of 2.2% in growth from acquisitions of 1.8%. Growth was partially offset by a decline of 0.6% from foreign currency. Although our key foreign currencies generally strengthened towards the end of the quarter, weighted average exchange rates in effect during the quarter were still unfavourable compared to the same period last year. As Julien mentioned, the increase from our core business sales revenue includes a contribution from new product introductions, strong online channel growth, incremental distribution in growth and international sales. This was partially offset by a decline of 12% from the nutritional supplement segment, declines in the personal care category in duty and the impact of lower store traffic in soft consumer spending at brick and mortar retail. Sales growth in the online channel continued to be strong and increased over 30% in the first quarter to now comprised over 13% of our consolidated net sales. Leadership brand core business revenue excluding the incremental half month of sales from the Hydro Flask acquisition in the quarter grew over 8% and leadership brand total revenue grew just under 12%. The leadership brands represented almost 62% of our consolidated net sales for the quarter compared to approximately…

[Operator Instructions] And we’ll go first to Bob Labick with CJS Securities.

Good morning and congratulation on a nice start to the year.

Thanks. Good morning, Bob.

Good morning. I wanted to start with the invest in core, 8% organic on the core is impressive. Couple questions around that. First, I guess it’s hard to answer maybe but how much of that is a snapback from a kind of weaker Q4? And then maybe asked a different way, roughly how much of the core or how much growth you expect in the core embedded in that 1 to 1.5% to 4% guidance already. Should we expect eight for the core the whole time? Is it six or trying to get a sense around that?

Let me just clarify Bob, because I wasn’t sure if you characterized it right. Its core on in our leadership brands not core for the whole company.

Core leadership brand, sure, okay. Thank you.

Yes. Okay. Right. No problem, as Brian mentioned that was leadership brands represent roughly 50% of all our revenues and significantly punch above their weight from a profitability standpoint. And in terms of the growth, thank, we’re working hard on this, and in terms the comparison, the 8% it’s actually not versus Q4, its versus the same period year ago or Q1 over Q1. And in terms of what to expect for the year? We do expect them to do well and drive the full company growth for the year, but our total bases of the full company growth for the year remains the same as the guidance that we gave, you know the 1.5% to 4.1%. And in terms of a guidance number, should it be eight, should it six. We’re not in a position to provide a specific guidance number for that group of brands, but we are trying very hard to push them above our average growth rate and have them lead the way.

Okay, great. And then just following on that, you’ve mentioned, I think its $28 million or $0.90 [ph] you just said, the incremental spending this year on in addition to the previous spending you’re already supporting. Can you just talk about where that's targeted and how that's budgeted and does it rollout evenly over the year? How should we think about that incremental spend?

Yes, great question. So we talked about that in the April call that we would invest – its actually an incremental $28 million, so over and above a significant investment underneath which is – that is a nine digit number. So there is a lot of spending going into our total business across the board and specifically an extra 28 million and that 28 million primarily focused on leadership brands. In terms of where it’s going as mentioned in the prepared comments just a few comments ago, its going into additional advertising, lot of new product development you hear is accelerating the pace. You heard us talk from two years now about innovation especially in places like Beauty that had insufficient innovation and then feeding the machines in areas like Health & Home and the OXO part of Housewares which have very impressive new innovation machines, but needed nonetheless more money to bring some of the biggest and best initiatives to life. In Hydro Flask, we’ve made major investments in Hydro Flask. Big money of that 28 million is going there. Things like new advertising campaigns, a lot of new web content across the board not just in Hydro Flask but in tons of other others and that digital marketing content is fueling some of that 30% growth in the online channel or the e-commerce world where its so important to have the right videos, the right messages, the right ads, the right defensive ads in some cases, and so many other blog spaces, social media and just a wide, wide range of these that are getting pieces of that 28 million. Packaging upgrade continue around the company that cost money. Our international rollout for some of our best prospects like the CurlBar for Hot Tools and EMEA is getting significant funds. We’re storing some funds that had been cut in the prior year when things like foreign exchange didn't go our way, I think Brexit hurt us last year, even though year-over-year it hurt this quarter, just because this quarter was pre-Brexit in the year but -- comparison period we nonetheless put the money back and spent a piece of it. And then in terms of cadence for the quarters you heard us talk in our SG&A comments that we were actually a bit below versus where we were before, you say if we were spending more, how can we’re spending less. And the answer is no, we were actually spending pieces of it in Q1. There are some very chunks still slated for the rest of the three quarters of year and as our leadership team we visit quarter by quarter, country by country, initiative by initiative we decide which things will ramp up, and in some cases which things will dial back. So far foreign exchange has been a small bear, a little headwind as Brian described in various parts of the company, but not enough to make a cut into that spending.

Got it. Great. And then you mentioned, I think couple times more than in the past international expansion. Could you first remind us, I think you’re over 80% in the U.S. And then, but more importantly just talk about the steps you’re taking to expand internationally and the thought process behind that growth?

Sure. So, just starting we’re about 80/20 between the U.S and International. And it wasn’t that higher in prior years when the company was closer to 75/25 and it’s because of acquisition in the U.S. So, if you take Hydro Flask, PUR, Healthy Directions is three meaningfully sized recent examples all of which are concentrated in the U.S., that’s the 80/20. And if you do the math on that what you’ll find out is actually the sum of those three is much bigger than the five points of difference, which said another way, we’re going faster outside of the United States than we are inside, and that’s been true for several years now. In terms of specific mentioned and the reason I got little extra emphasis here, is it help drive Q1. So if you look at OXO which was mentioned specifically on international expansion such as distribution gains in Spain and now also the Soft Works line at some major mass-market retailers in the U.K. you might have remember that we talked I think it was in the October call or might have been in the January one around new distribution gains that would be rolling out in the UK for OXO under the Soft Works line. Those have now gotten their placement and they are starting to sell through and are helping to drive the U.K. results for OXO. The Spain distribution gains are helping as well. On EMEA we also mentioned the Hot Tools expansion internationally in Q1 which is helping us with the broader strategy of stabilizing in Beauty and that idea is to bring one of our leadership brands Hot Tools to Europe and spread it into the professional channels. And frankly it got some traction and is driving sales. So those were some of the numbers and some of the mentions. Meanwhile Health & Home which is the largest international part of our business as well as our largest business among all the segments is doing well Overseas in Europe, but not to there, also in other geographies such as China where the online growth especially in thermometers, continues to be impressive and is helping to drive results on the Braun business. So, here’s a good look at international.

Great. Thank you very much. With that I will get back in queue. And we look forward to seeing you at the conference tomorrow. Thank you.

Yes, Thanks. We’re heading over tonight.

[Operator Instructions]. We’ll go next to Jason Gere with KeyBanc Capital Markets.

Great. Good morning and congratulations guys on a nice start to the year. I guess a couple of questions. One, I just want to talk about the cadence of the sales trend. So obviously still a wide range for the sales for the year 1.5 to 4.1. We assume that acquisition and FX more or less offset each other, that's that the pure kind organic number. So I guess couple of questions and just wondering if you can get some color on this. One, you do have some easier comparisons on niche categories as well as on the Housewares. So just wondering in the first quarter [Indiscernible] new product introductions were there on the Houseware side, how much I guess will extend to the rest there? And then, when you think about Beauty, you had a good start, but you are still looking for mid-single kind of declines. So just the comparisons I still think are somewhat easier. So I was just wondering if you kind frame up maybe looking at the segment guidance, what kind sold in the quarter and then maybe in terms of what's shipping in the rest of the year. And then just in terms of where you have the highest degree of confidence because the guide -- the range is still pretty wide. And I understand it’s a tough environment. But I was just wondering if you can get a little bit more color on kind of those puts and takes?

Sure. Yes. Hi, Jason. Thanks. And good question. In terms of core, it’s so hard to predict quarter-by-quarter with the degree of accuracy because I wish it was just what we’re shipping, even some times what shipping out, but there’s other big factors, assuming for a minute that foreign exchange stays roughly where it is and that would help to know, but there are so many other factors. One of the huge ones that we can never predict is the cold and flu season, which is upcoming. In the last two years everybody assumed just mathematically it would be an average season, but we’re wrong both times. They were even some very well regarded [ph] public speculators that talked about an above average cold flu season last year, it wasn’t but they were wrong and the point is it so hard to predict the quarters, which is why frankly we don’t give the quarterly guidance. If you look at other seasonality trends, for example, it was a slightly warmer winter, this last year we sold a little bit less in the heater category, but it’s so far been a hot summer and fans are doing well as a result of that. So just so hard to know which categories and which margin profile et cetera. And in terms of the brand themselves, there are terrific rollouts planned. In Housewares as you mentioned specifically, that list that I gave is not a comprehensive list. There's plenty of others, for example, in coffee we’re making a pretty big push and have some pretty terrific products yet to come in that segment during the course of the year. For competitive reasons we don't give a lot of the details well ahead of launches but it's just a strategic vectors so to speak and…

No. That’s true. Actually just to ask my second question I want to ask what was the actual year to year growth in Hydro Flask if you just assumed that was in your portfolio for the whole time. I know those two weeks that you didn't own it. But what was the growth between OXO and Hydro Flask to comprise that 16% just out of curiosity?

Hey, Jason, sorry, we’re not required to break it out for competitive reasons where we would prefer not to give that breakdown any longer that we don't have the requirements. I don’t if you want to add to that.

It’s in our core now after a year with us and that’s why we went out of our to say that OXO was also growing, so as Hydro Flask and the comparison actually get harder over time just because OXO – sorry Hydro Flask grew each quarter during the year, so that it will get harder decline, but if you take the history of OXO and you look at the total guidance for the year you could probably make an estimate on your own of what the breakout is, but it would be very hard for us to break up the two and keep signaling out to our competitors exactly how each individual brands is expected to perform.

No, no, that’s fair. And maybe that – and just I mean, I guess, when dovetailing to the second question I have is you’re talking about the leadership brands and I think that's the right way to think about it as these are the core brands. So what’s your stand? I mean you guys are viewed by the investor community for your strong cash flow. Obviously you’ve seen your leverage come down. M&A is a big part of the strategy. But a lot of companies in the past have been I guess reluctant to sell off what I would consider brands that are not performing well. And obviously you’ve provided some strategic alternatives about the nutrition. But what about the other I guess businesses that are in the portfolio that are not part of the leadership. Do you keep on this tail brands even if they're not growing just to manage for the cash flow how do you think about when you want to make additional acquisitions to put into the portfolio? I’m just this wondering if anything is changed just with what you see with nutritional and how you want to figure out what to do with that going forward. But just the other parts of the portfolio any change in how your approaching that strategy?

Yes. It’s a great question and a very perceptive one. You hear us in the last two calls put some emphasis on leadership brands, so it obviously begs the question of what about the rest of the portfolio. We value all the brands in the portfolio, but we don't consider them all investment-grade the same way because of their financial profile and their market prospects. So there are some brand that we’re investing more in, that’s $28 million discussion and some that we’re either investing the same or even a few were investing less. You’ve heard the strategic alternatives conversation on nutritional supplements and that’s not new. We had first mentioned that in some of our prior disclosures, but it's not -- just the potential for the divestiture, there’s other possibilities as I mentioned in my comments and Brian elaborated his and in our Q you will see even more on that subject. And in the case of other pieces of the portfolio, you’re right to every company I believe has the old classic matrix of stars and harvest and investments in dogs and cats and all of that. And as a result we are careful with ours too. And in terms of what we would do you might have heard me say at the end of my remarks that we’ll continue to review our existing portfolio to direct our best efforts towards our best prospects and it's our intention to do exactly that. And as we see the right opportunity to change something we are not afraid to grab that opportunity. And frankly on the acquisition side you’ve seen us move aggressively on multiple times even just during my time as CEO and many times before that on the subject of adding winners to the portfolio and building out that leadership brand portfolio. So, I guess I'm trying to signal that we’re not afraid to take a hard look and in terms of whether there’s a change, I’d simply say that the words that you might've heard as just comments before of taking a look at our portfolio are increasingly true and we’re acting on them.

Okay, great. And then the last question and then I promise I’ll jump off. But you’re talking about, we have tough retail environment out there. I think you said that online grew 30%, so I guess two questions. One, within that -- within the online of 30% is that inclusiveness of Healthy Directions or not? And then what did you see a brick-and-mortar, did you see actually decline in sales there? Or was it kind of flattish and the promotional environment out there do you think it's getting worst? Do you think are your retail partners looking for you to kind of do more merchandising to help support traffic in the store? And that's my last question.

Good. All great ones, yes, thanks Jason. So in terms of online, it’s inclusive of all the business that we do online. So Healthy Directions you probably heard us mentioned in various prior calls have expanded from a pure play DTC to now also some specialty channel which includes online. So there's a couple of big customers. I think we’ve mentioned GNC and Amazon both in the past as two particular examples and we’re growing meaningfully in the online portion. Amazon, well, it’s not that big for us in that sector, its growing very rapidly much faster than 30%.

And our own website.

Yes. And our own, Healthy Directions website which we struggled massively, you heard us talk a lot about those struggles to not only get online but to get into the right system execution. That’s now in pretty good shape and frankly those sales are growing as a result of it in our own direct-to-consumer online. And then the 30% is all inclusive and it’s also global, so everything that we sell through an online play whether it’s ours or through one of our customers is included in the 30% including the portion through Healthy Directions. And then importantly it's not just the traditional online pure plays but the brick-and-mortar which you mentioned has increasingly gotten their own act together online and its a popular sports we read about that in the newspaper, Wal-Mart, Jet.com front page once a week for some reason and we are feeding that in a big way beyond the biggest players like an Amazon. In terms of brick-and-mortar performance, hanging in there would be my short answer. If you perhaps this idea that brick-and-mortar is [Indiscernible] and that online is going to rule the world. What’s happening is that the balance is shifting much more quickly than people have originally expected. We're agnostic. We believe in our customers. We love them all. And as they win we are working very hard to win with the winning customers and to continue to feed the traditional channel, but it's not growing anything like what we’re see in online and nothing like 30%. Whether it’s shrinking or not, we don’t break out channel by channel. And in like – little on customer by customer. In terms of the promo environment which you had lastly mentioned, it continues to be a tough world out there. There's a lot of that activity. But I would do not say that it's more than in the past. I’d say it’s more of the same. And it just busy to get people like you said in stores and to win those sales among the declining set of foot traffic, but that's not different than it was before and I wouldn’t say that in Q1 or even for the rest of this year we’re expecting to see some massive need to double up all our promotions or something like that just to keep the sales base we have in the prior year periods.

Okay, great. Thank you for entertaining all my questions.

Thanks. They are all great ones and appreciate it Jason.

And with no further questions in the queue, I’d like to turn the call back over to Mr. Mininberg for any additional or closing remarks.

Yes, sure. I just want to thank everyone for joining us today, especially with the time change versus our traditional slot, and your continued interest in Helen of Troy. It makes a huge difference to us and I hope the investor base that’s out there who we are very friendly toward and value greatly. We look forward to speaking with many of you in the coming days and also the coming weeks as we’re now out of our quiet period. And we’ll be reporting further progress with our second quarter results and that would be in early October. So thank so much and have terrific day.

Again, that does conclude today’s presentation. We thank you for your participation.