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Helen of Troy Announces the Sale of Healthy Directions LLC

12/20/17

Transaction helps further focus the Company around its Leadership Brands; retains DTC capability

EL PASO, Texas--(BUSINESS WIRE)-- Helen of Troy Limited (NASDAQ:HELE) (“the Company”), designer, developer and worldwide marketer of consumer brand-name housewares, health and home, nutritional supplement and beauty products, today announced it has sold Healthy Directions LLC (“Healthy Directions”) and subsidiaries, which make up its Nutritional Supplements segment, to Direct Digital LLC (“Direct Digital”), a leader in the areas of product development and marketing within the health and wellness space. Healthy Directions is a leading provider of premier doctor-formulated nutritional supplements, products, and expert natural health guidance sold directly to consumers. The sale of Healthy Directions advances the Company’s strategy to focus its resources on its Leadership Brands. The Company’s Leadership Brands are among the highest volume, highest margin and most asset-efficient businesses at Helen of Troy.

Proceeds from the sale are comprised of $46 million in cash and a supplemental payment with a target value of $25 million, payable on or before August 1, 2019. The final amount of the supplemental payment may be adjusted up or down based on the performance of Healthy Directions through February 28, 2018. The transaction is also subject to customary working capital and other adjustments. Proceeds will be used to pay down debt, make accretive acquisitions or opportunistic share repurchases to create further shareholder value. The Company will further discuss the transaction during its third quarter fiscal 2018 earnings conference call, currently scheduled for January 8, 2017 at 9:00 a.m. Eastern.

Julien R. Mininberg, Chief Executive Officer, stated: “We are pleased to have entered into this transaction. We believe Healthy Directions and its highly dedicated staff will benefit from its new home with Direct Digital, a privately-held company focused on the vitamin, mineral and supplement market. We believe Direct Digital is well-positioned to take Healthy Directions to its next phase of growth. As we part ways with Healthy Directions, we thank the management and staff for all their efforts, and wish them well.”

Mr. Mininberg continued: “This transaction will strengthen the overall portfolio of Helen of Troy, and focus our resources toward our most attractive business prospects, including our seven Leadership Brands. These brands include Braun, Honeywell, PUR, Vicks, OXO, Hydro Flask and Hot Tools, all of which can fully leverage our shared services platform, strong balance sheet, and global presence as we continue to execute our strategic transformation plan. Our strategic plan also includes seeking further acquisition opportunities. The direct-to-consumer systems and fulfillment capability we have built for Healthy Directions will continue to be of value to Helen of Troy’s remaining portfolio. This will allow us to continue building on the investments and know-how in direct-to-consumer online sales, and the fulfillment efficiencies we have gained in our distribution center.”

Brandon Adcock, Co-founder and president of Direct Digital, LLC, said, “We are very excited about today’s announcement and welcome the collective talent and energy of the Healthy Directions team to the Direct Digital family. We are extremely pleased to add Healthy Directions to our health and wellness platform. Healthy Directions’ family of highly respected doctors and wellness experts will be a tremendous complement to our portfolio of nutritional brands. The Healthy Directions marketing platform will further strengthen Direct Digital’s omni channel strategy by adding robust, authoritative content, as well as market leading direct mail capabilities. We believe this combination, together with our distinctive entrepreneurial culture, lean operating structure, and efficient business model, will enable Direct Digital to continue to bring innovative and category leading nutritional supplements to market.”

Cantor Fitzgerald provided lead advisory services and Baker & McKenzie LLP served as legal counsel to Helen of Troy on the transaction. Deloitte Corporate Finance LLC acted as financial advisor and Davis & Gilbert LLP served as legal counsel to Direct Digital LLC on the transaction.

Non-GAAP Financial Measures:

The Company reports and discusses its operating results using financial measures consistent with accounting principles generally accepted in the United States of America (“GAAP”). To supplement its presentation, the Company discloses certain financial measures that may be considered non-GAAP financial measures, such as Leadership Brand net sales, adjusted operating income, adjusted operating margin, adjusted effective tax rate, adjusted income, adjusted diluted EPS, EBITDA and adjusted EBITDA, which are presented in accompanying tables to this press release along with a reconciliation of these financial measures to their corresponding GAAP-based measures presented in the Company’s consolidated statements of income.

Forward Looking Statements:

Certain written and oral statements made by our Company and subsidiaries of our Company may constitute "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. This includes statements made in this press release. Generally, the words "anticipates", "believes", "expects", "plans", "may", "will", "should", "seeks", "estimates", "project", "predict", "potential", "continue", "intends", and other similar words identify forward-looking statements. All statements that address operating results, events or developments that we expect or anticipate will occur in the future, including statements related to sales, earnings per share results, and statements expressing general expectations about future operating results, are forward-looking statements and are based upon our current expectations and various assumptions. We believe there is a reasonable basis for our expectations and assumptions, but there can be no assurance that we will realize our expectations or that our assumptions will prove correct. Forward-looking statements are subject to risks that could cause them to differ materially from actual results. Accordingly, we caution readers not to place undue reliance on forward-looking statements. The forward-looking statements contained in this press release should be read in conjunction with, and are subject to and qualified by, the risks described in the Company's Form 10-K for the year ended February 28, 2017 and in our other filings with the SEC. Investors are urged to refer to the risk factors referred to above for a description of these risks. Such risks include, among others, our ability to deliver products to our customers in a timely manner and according to their fulfillment standards, the costs of complying with the business demands and requirements of large sophisticated customers, our relationships with key customers and licensors, our dependence on the strength of retail economies and vulnerabilities to any prolonged economic downturn, our dependence on sales to several large customers and the risks associated with any loss or substantial decline in sales to top customers, expectations regarding any proposed restructurings, our recent and future acquisitions or divestitures, including our ability to realize anticipated cost savings, synergies and other benefits along with our ability to effectively integrate acquired businesses or separate divested businesses, circumstances which may contribute to future impairment of goodwill, intangible or other long-lived assets, the retention and recruitment of key personnel, foreign currency exchange rate fluctuations, disruptions in U.S., U.K., Euro zone, and other international credit markets, risks associated with weather conditions, the duration and severity of the cold and flu season and other related factors, our dependence on foreign sources of supply and foreign manufacturing, and associated operational risks including, but not limited to, long lead times, consistent local labor availability and capacity, and timely availability of sufficient shipping carrier capacity, risks to the Nutritional Supplements segment associated with the availability, purity and integrity of materials used in the manufacture of vitamins, minerals and supplements, the impact of changing costs of raw materials, labor and energy on cost of goods sold and certain operating expenses, the geographic concentration and peak season capacity of certain U.S. distribution facilities increases our exposure to significant shipping disruptions and added shipping and storage costs, our projections of product demand, sales and net income are highly subjective in nature and future sales and net income could vary in a material amount from such projections, the risks associated with the use of trademarks licensed from and to third parties, our ability to develop and introduce a continuing stream of new products to meet changing consumer preferences, increased product liability and reputational risks associated with the formulation and distribution of vitamins, minerals and supplements, the risks associated with potential adverse publicity and negative public perception regarding the use of vitamins, minerals and supplements, trade barriers, exchange controls, expropriations, and other risks associated with U.S. and foreign operations, the risks to our liquidity as a result of changes to capital market conditions and other constraints or events that impose constraints on our cash resources and ability to operate our business, the costs, complexity and challenges of upgrading and managing our global information systems, the risks associated with information security breaches, the increased complexity of compliance with new government regulations covering vitamins, minerals and supplements, the risks associated with product recalls, product liability, other claims, and related litigation against us, the risks associated with accounting for tax positions, tax audits and related disputes with taxing authorities, the risks of potential changes in laws in the U.S. or abroad, including tax laws, regulations or treaties, employment and health insurance laws and regulations, and laws relating to environmental policy, financial regulation, transportation policy and infrastructure policy along with the costs and complexities of compliance with such laws, and our ability to continue to avoid classification as a controlled foreign corporation. We undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.

About Helen of Troy Limited:

Helen of Troy Limited (NASDAQ, NM: HELE) is a leading global consumer products company offering creative solutions for its customers through a strong portfolio of well-recognized and widely-trusted brands, including OXO®, Hydro Flask®, Vicks®, Braun®, Honeywell®, PUR®, Febreze®, Revlon®, Pro Beauty Tools®, Sure®, Pert®, Infusium23®, Brut®, Ammens®, Hot Tools®, Bed Head®, Dr. Sinatra®, Dr. David Williams, and Dr. Whitaker®. All trademarks herein belong to Helen of Troy Limited (or its affiliates) and/or are used under license from their respective licensors.

For more information about Helen of Troy, please visit www.hotus.com.

About Direct Digital:

Direct Digital, LLC, is based in Charlotte, NC, and Boston, MA and is a leader in the areas of product development and marketing within the health and wellness space. Direct Digital owns the Nugenix®, Instaflex®, Peptiva™, Lumiday® and Luminite® brands, which are distributed throughout North America and internationally, direct-to-consumer and leading national retailers.

For additional information, please visit http://www.DirectDigitalllc.com.

Source: Helen of Troy Limited

Investors:

Helen of Troy Limited

Anne Rakunas, 915-225-4841

Director, External Communications

or

ICR, Inc.

Allison Malkin, 203-682-8200

Sr. Managing Director

or

For press inquiries regarding Direct Digital:

Mike Amburgey, 754-666-0377

Chief Marketing Officer

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