Helen of Troy Ltd (HELE) 2010 Q4 法說會逐字稿

Good morning, ladies and gentlemen, to the Helen of Troy fourth quarter and year end conference call for fiscal 2010.

At this time, I would like to inform you that all participants are in a listen-only mode.

At the request of the Company, we will open the conference up for questions and answers after the presentation.

Our speakers for this morning's conference are Gerald Rubin, Chairman, Chief Executive Officer and President; Thomas Benson, Senior Vice President and Chief Financial Officer, and Robert Spear, Senior Vice President and Chief Information Officer.

I will now turn the conference over to Mr.

Robert Spear.

Please go ahead, sir.

Thank you.

Good morning, everyone, and welcome to Helen of Troy's fourth quarter and year end financial results conference call for fiscal 2010.

The agenda for this morning's conference call will be as follows.

We'll have a brief forward-looking statement review, followed by Mr.

Rubin, who will discuss our fourth quarter and year end earnings release, and related results of operations for Helen of Troy; followed by financial review of our income statement and balance sheet for the fourth quarter and year end by Tom Benson, our Chief Financial Officer.

And finally, we'll open it up for questions and answers.

Safe Harbor -- 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.

A number of risks or uncertainties may cause actual results to differ materially from historical or anticipated results.

Generally the words anticipates, believes, expects, and other similar words identify forward-looking statements.

Forward-looking statements are subject to risks that could cause such statements to differ materially from actual.

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

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 companies.

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

Before I turn the conference call over to our Chairman, Mr.

Rubin, I would like to inform all interested parties that a copy of today's earnings release has been posted on our 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 accessed by selecting the Investor Relations tab on our home page, and then the news tab.

I will now turn the conference over to Mr.

Gerald Rubin, Chairman, CEO and President of Helen of Troy.

Good morning, everybody.

Welcome to our conference call.

Helen of Troy today reported record fourth quarter net sales revenue and record net income, and improved net sales revenue and improved net income for the fiscal year ending February 28, 2010.

Our fourth quarter net sales revenue increased 9.8% to $152,161,000 from $138,580,000 in the same period of the prior year.

Fourth quarter net sales revenue in the Housewares segment increased 12.2% to $50 million, compared to $44,594,000 for the same period last year, demonstrating the continued strength of our OXO brands.

Next sales revenue in the personal care segment increased 8.7% to $102,133,000 in the fourth quarter, compared to $93,986,000 for the same period last year, reflecting the acquisition of the Infusium 23 hair care business on March 31, 2009, partially offset by a still challenging retail environment.

Net income for the fourth quarter was $16,664,000 or $0.54 per fully diluted share.

Income in the prior year's fourth quarter, excluding the impairment charge, was $11,022,000 or $0.36 per fully diluted share.

Net income increased 51.2% in the fourth quarter of fiscal 2010 when compared to income in the fourth quarter of the prior year, after excluding the impairment charge in the prior year fourth quarter.

Fiscal year net sales revenue increased 4% to $647,626,000 from $622,745,000 in the prior fiscal year.

Net sales revenue in the Housewares segment for the full year increased 13.1% to $198,475,000, compared to $175,501,000 for the same period last year.

Net sales revenue in the Personal Care segment for the full year increased 0.4% to $449,151,000, compared to $447,244,000 for the same period last year.

Net income for the year was $71,817,000 or $2.32 per fully diluted share.

On a non-GAAP basis, income in the previous fiscal year, excluding significant items, was $49,293,000 or $1.59 per fully diluted share.

Fiscal 2010 net income increased 45.7% compared to the prior fiscal year, after excluding the significant items from the prior fiscal year.

Fourth quarter gross profit as a percentage of net sales revenue increased to 44.8%, compared to 38.7% in the same period last year.

Fiscal year gross profit as a percentage of net sales revenue increased to 43.1% in fiscal 2010 from 41% in fiscal 2009.

We are very pleased with our fourth quarter results.

We continue to make progress in achieving our strategic business objectives initiated during the past year.

At fiscal year end, our cash, cash equivalents and trading security balance was $110 million, and on March 31, 2010, we utilized $69 million of our available cash to acquire the Pert Plus and the Sure brands from Innovative Brands LLC, and we anticipate that our Pert Plus and Sure brands will be immediately accretive to earnings.

Our ongoing efforts to improve our gross profit margin and reduce expenses as a percent of sales are reflected in our results for the full year.

We plan to continue to implement the following specific initiatives for fiscal 2011, with the goal of achieving net sales revenue and net income growth -- continued growth and expansion of the OXO product lines; continued investment in new product line development, and introductions to gain market share; integration and development of our new Pert Plus and Sure product lines; continued sourcing and product cost management initiatives to offset expected commodity and inbound transportation cost increases; continued implementation of productivity initiatives to reduce operating expenses; and the pursuit of additional acquisitions of complementary businesses or product lines.

I would now like to turn over our conference call to Tom Benson, our CFO, who will give us a financial update.

Thank you, Gerry.

Good morning, everyone.

In the fourth quarter, we experienced a year-over-year net sales revenue increase of 9.8%, reflecting sales from the Infusium 23 acquisition and continued strength of our OXO brand, partially offset by the impact of a continued difficult retail sales environment.

Gross profit margin improved by 6.1 percentage points year-over-year.

Fourth quarter selling, general and administrative expense as a percent of net sales revenue increased by 3.2 percentage points compared to the same period last year, which I will discuss in more detail shortly.

Fourth quarter net income was $16.7 million or $0.54 per fully diluted share, compared to a loss of $88 million or $2.93 per fully diluted share for the same period last year.

The prior year fourth quarter includes noncash asset impairment charges of $99.1 million net of tax.

After excluding this significant item, prior year non-GAAP income was $11 million or $0.36 per fully diluted share.

GAAP-based net income for the fourth quarter fiscal 2010 improved by $5.6 million or $0.18 per fully diluted share, compared to prior year non-GAAP income, excluding the significant item.

Please refer to the schedules accompanying the press release for a reconciliation of net income loss as reported, to income without the significant items.

Fourth quarter net sales revenue increased 9.8% year-over-year.

Net sales revenue in the fourth quarter of fiscal 2010 was $152.2 million, compared to $138.6 million in the fourth quarter of fiscal 2009.

This is an increase of $13.6 million or 9.8%.

The increase in net sales revenue reflects the year-over-year impact of the Infusium 23 acquisition, and the continued growth of our Housewares segment due to the success of the dry food storage category, the launch of the wet food storage line, and other line extensions.

Sales growth was partially offset by the difficult retail environment, and its continued impact on consumer demand, mostly in our appliance product category.

Operating income before impairments increased by 39.2% in dollar terms year-over-year.

Operating income before impairments in the fourth quarter of fiscal 2010 was $20.6 million, which is 13.5% of net sales, compared to $14.8 million or 10.7% of net sales in the fourth quarter of fiscal 2009.

This represents an increase of $5.8 million or 39.2%.

The increase in operating income before impairment primarily reflects the impact of sales growth and improvements in gross profit margin.

Net income in the prior year fourth quarter includes noncash asset impairment charges of $99.1 million net of tax.

After excluding the significant item, prior year's net income was $11 million.

Fiscal 2010 fourth quarter net income improved by $5.6 million compared to the prior year income, excluding the significant item.

Income excluding significant items in the fourth quarter fiscal 2010 was $16.7 million, 11% of net sales, compared to $11 million or 8% of net sales in the fourth quarter of fiscal 2009.

This is an increase of $5.6 million or 51.2%.

The growth in income reflects an increase in net sales revenue and gross profit margin improvement, as well as the impact of lower interest expense year-over-year.

Fourth quarter diluted earnings per share was $0.54 in the fourth quarter of fiscal 2010, compared to a $2.93 loss in the fourth quarter of fiscal 2009.

This is an increase year-over-year of $3.47.

After excluding the noncash impairment charges of $99.1 million for the prior year fourth quarter, diluted earnings per share without significant items was $0.54 in the fourth quarter of fiscal 2010, compared to $0.36 in the fourth quarter of fiscal 2009.

This is an increase of $0.18 or 50%.

Now I'd like to provide a more detailed review of various components of our financial performance.

Products in our Personal Care segment include hair dryers, flat irons, curling irons, thermal brushes, massagers, spa products, foot baths, electric clippers and trimmers, hair brushes and accessories, liquid hair care and styling products, shampoos, hair treatments, men fragrances, men deodorants, foot powder, body powder and skin care products.

Key brands in this segment include Revlon, Vidal Sassoon, Bed Head, Hot Tools, Dr.

Scholl's, Gold N' Hot, Brut, Ammens, Sea Breeze, Ogilvie and Infusium 23.

Personal Care net sales were $102.1 million in the fourth quarter fiscal of 2010, compared to $94 million in the fourth quarter of fiscal 2009.

This is an increase of $8.1 million or 8.7%.

The growth in Personal Care net sales revenue reflects the year-over-year impact of the Infusium 23 acquisition, partially offset by a still difficult retail sales environment.

Our Housewares segment consists of the OXO business.

OXO's a leader in providing innovative consumer product tools in a variety of areas, including kitchen, cleaning, barbecue, bar ware, garden, automotive, storage and organization.

Brands that we sell include OXO Good Grips, OXO Steel, OXO SoftWorks, OXO Touchables and Candela.

The Housewares segment's net sales revenue was $50 million in the fourth quarter of fiscal 2010, compared to $44.6 million in the fourth quarter of fiscal 2009.

This is an increase of $5.4 million or 12.2%.

Sales growth was driven by the continued success of our Good Grips POP line of modular dry food storage containers, the year-over-year impact of the launch of our wet food storage line, customer price increases and improvement in product mix.

Consolidated gross profit for the fourth quarter was $68.2 million, which is 44.8% of net sales in the fourth quarter of fiscal 2010, compared to $53.7 million, which is 38.7% of net sales, in the fourth quarter fiscal 2009.

This is a dollar increase of $14.5 million, and a percentage increase in dollar terms of 27.1%.

The gross profit margin as a percentage of sales increased 6.1 percentage points.

The improvement in gross profit is due to the impact of commodity costs and inbound freight decreases from earlier this year, that began to cycle through our costs of goods sold in the second half of the fiscal year; lower sourcing overhead as a result of streamlining our Far East sourcing operations; customer price increase and product mix improvements in the Housewares segment; and the impact of the Infusium and Ogilvie acquisitions, which have comparatively higher margins than the core business.

We do not anticipate continued gross profit improvement, due to recent product and inbound transportation cost increases.

Fourth quarter selling, general and administrative expense was $47.7 million, which is 31.3% of net sales in the fourth quarter of fiscal 2010, compared to $38.9 million, which is 28.1% of net sales in the fourth quarter of fiscal 2009.

This represents an increase of $8.7 million in dollar terms.

It is a percentage increase of 22.5% in dollar terms, and it's an increase as a percentage of sales of 3.2 percentage points.

The increase in SG&A in the fourth quarter is primarily due to an increase in incentive compensation expense due to the year-over-year improvement in our overall financial results; higher advertising expense; higher intangible asset amortization as a result of recent acquisitions; and higher foreign exchange losses, mostly due to a devaluation of the Venezuelan currency in the fourth quarter.

Interest expense for the fourth quarter was $2.1 million or 1.4% of net sales revenue, compared to $3.4 million or 2.4% of net sales revenue in the same quarter last year.

The decrease in interest expense is due to lower levels of outstanding debt.

Income tax for the fourth quarter of fiscal 2010 was $1.9 million, compared to $126,000 in the fourth quarter of fiscal 2009.

Fourth quarter income tax expense was 10.3% of pretax earnings, compared to a negative 0.1% effective tax rate in the same quarter last year.

The fluctuation in our effective tax rates year-over-year is attributable to the net loss resulting from the intangible asset impairment charges recorded in the fourth quarter of fiscal 2009, and the minimal tax benefit received from the write-offs.

I will now discuss our financial position.

Our cash, cash equivalents and trading security balance was $110.2 million at February 28, 2010, compared to $103.2 million at February 28, 2009; and we had no borrowings on our $50 million revolving line of credit.

Our long-term investment balance was $20.5 million at February 28, 2010, compared to $20 million at February 28, 2009.

We used $69 million of cash on hand for the Pert and Sure acquisition, which closed on March 31, 2010.

Receivables were $109.7 million at February 28, 2010, compared to $103.5 million at February 28, 2009.

Receivable turnover improved to 65.3 days at February 28, 2010, from 68.3 days at February 28, 2009.

Inventory at February 28, 2010 was $124 million, compared to $169.8 million at February 28, 2009, a reduction of $45.8 million.

Stockholder equity increased $75.1 million to $583.8 million at February 28, 2010, compared to $508.7 million at Feb 28, 2009.

I will now turn it over to Gerry for questions.

Thank you, Tom.

Operator, we will now entertain questions.

(Operator Instructions)

We'll hear first from [Per Auslin] with Jefferies & Company.

Please go ahead.

Thank you, good morning, everybody.

Question on Pert and Sure, if we can start there.

Now that you've had that in-house for, I guess, just over a month, how do you sort of handicap the near and long-term opportunities for the brands?

Is it something where you see the opportunity to probably be a little more aggressive on the marketing front than the previous owners were?

You know, do you see -- near or longer term have a greater international opportunity here maybe, and what are your thoughts on the sourcing?

Thank you for the question.

As you know, a year ago, we bought Infusium 23, and that's worked out very, very well for us.

We have integrated into our system, just as we're going to be doing in the next 30 to 60 days for Pert and [Plus].

The sourcing for those products, for Pert Plus and Sure were not done in-house, they were third parties that we currently do business with.

So we believe that we will continue to do business with them, and hopefully get better prices because of the volume that we give all these manufacturers.

As you know, we do not manufacture everything; everything is made by third parties for us.

And as far as increasing the business, we're very aggressive.

We are going, you know, to continue the business that Innovative had.

We believe that because of our strength, that we will be stronger in the marketplace, more promotional.

You know, we will continue to advertise, possibly to a greater extent than they did in the past, and grow the businesses.

That business and -- the Innovative business and the Infusium 23, plus our other brands, will benefit because we are now going to be more important to the retailers.

So overall, it turned out to be a very, very good acquisition for us.

It certainly seems that way.

Is it fair for us to assume that the Pert and Sure businesses will carry higher margins than your current corporate average?

Yes.

It's be more in line with the Infusium 23.

As you all know, none of the results that we just talked about have the inclusion of the Pert and Sure, because we purchased it on April 1st, which was one month after our fiscal year started.

So we will -- as this year goes on, we'll have 11 months of Pert and Sure included in our -- on our sales and earnings.

Appreciate the clarification on that.

What was the Infusium contribution to sales this quarter?

This is Tom Benson.

We're filing our 10-K tomorrow, and you'll be able to figure it out from there.

My recollection is that it was just over $8 million.

But it's provided in the K, you can figure it out.

Okay.

So if I'm figuring this correctly, at about $8 million, that would suggest that Personal Care then on a whole was probably about flat organically.

Does that sound about right?

Without the Infusium, it was down slightly.

Okay.

Which is a good improvement from the prior quarters.

Yes.

Can you speak to appliances specifically at all at this point, or is that something that we should wait on the K for?

We really don't -- I mean, within our Personal Care, we have appliances, we have liquids and lotions, we have brushes, combs and accessories, as I explained what's in there, and the liquids and lotions have been growing through acquisitions and some core growth.

The appliances have been a tough area for an extended period of time, but the trend had improved in the fourth quarter.

Okay.

One last one for now.

Just wanted to get back to something you said, Tom, on the gross margin front, because obviously this quarter was a really, really strong increase.

Right.

When you said you don't expect gross margin increases going forward, was it not seeing margin increases of that magnitude or not seeing gross margin increases period?

As I stated, we had a 44.8% gross profit margin for the quarter.

For the year, we had a 43.1%.

In the current environment, I do not see those growing.

Okay.

Basically because the product costs and the freight costs are heading up, and the better mix probably offsets that, but not a dramatic shift?

Is that fair?

Yes, there's a lot of things that go into it, and so, I mean, the reason I made that comment is we had a 6% increase year-over-year, 6 percentage points, and -- which was a very good result.

And I think, you know, we've reached a level that we're gonna work hard to maintain, but I would not -- people should not expect a continue in increases.

Okay.

Thank you very much.

Thank you.

We'll take our next question from Jason Gere with RBC Capital Markets.

Please go ahead.

Thanks.

Good morning, guys.

Just following up on the gross margin, I thought the initial comment was on gross profit not increasing but it was gross margin.

So I guess your range historically -- I think longer term is 40 to 45.

Can you just kind of, one, rank order some of the biggest gross margin drivers that are out there?

Two, I know you said it shouldn't increase, but should we expect gross margins to contract a little bit?

And then kind of on the third point of that, would you still expect operating margin improvement as, ie., SG&A leverage kind of coming through?

And then have I a follow-on question.

The larger percentage profit comes from our liquids.

I'd say second comes from our Housewares division, OXO, and the third comes from appliances.

And you're right, even though the gross profit percentage, you know, we're not looking for another 6% increase for the next quarter, the net profit should increase because, as we have told you all, that Pert and Sure should about $65 million more in sales for us, and we've incorporated that into our Idelle Labs division, and we will not be operating the Innovative brands company out of Phoenix.

So there's a lot of synergies that'll come in the next 60 days, with the Pert and Sure being put into the Idelle Labs.

So the answer is yes, we're looking for improved profit percentage coming for the next year.

Okay.

So just to be clear, so flattish gross margins but SG&A leverage gets you to some margin improvement?

True.

Okay, good.

Can you just talk on OXO?

I just wanted to get an early read on the launches, the wet launch, baby.

Just in terms of, I think, Gerry, you've been out there maybe a couple months ago talking about the growth prospects of OXO, thinking the $230 million range.

I just to say, I know you were talking the retail environment was a little bit more difficult.

I don't think you were really talking about OXO as much as maybe on the Personal Care side.

So I was just wondering if that kind of still holds true?

That would kind of imply a 15% growth if that was the case for this year?

Okay.

Well as you know, we reported that the Housewares segment, which is OXO, increased 12.2%, and for the year, 13%.

So yes, we're looking for the same double-digit growth for next year.

They have a lot of new products; there's something like 160 new products that are gonna be shown this year.

The OXO Tots, which we've talked about, will have very good placement, but the shipments will not occur until the third quarter of this year, somewhere around September.

Our third quarter starts September, and that's when the initial shipments will be made, although some may be shipped the month before, but for the most part it's going to turn out to be August, September.

But you're right, that's still growing, and as well as our liquids are growing very, very nicely also, and they're going to have that big increase next year because of the Pert and Sure acquisition.

Just on OXO, can you talk a little bit about additional facings or SKUs existing channels, as opposed to what -- are there new channels or new retailers that you've gained entrance into?

Can you just talk about where you've seen some of those winds come through to kind of drive that type of [sale]?

Because clearly, that type of growth is well above most any category out there in the HPC industry right now?

What's happening with them, you know, they're always obtaining new customers, but as far as the major customers, you know, they sell, or we sell, all of the major customers that we do want to sell at the present time.

So the success comes from the retailers that we're currently selling -- buying and selling more merchandise.

So as we come out with all these new products, of course they have to increase the space that they give us.

So the growth is coming from increased space, and new product categories that we're into.

And the baby area, the baby, the Tots, the OXO Tots, that would be new customers also.

Okay, great.

And then just the last question, just on hair care with obviously Pert, and the money behind it, can you talk about what you're seeing?

Obviously, we've heard a lot about the promotional environment.

Hair care is one of those categories where it's gotten a little bit more difficult.

You know, in terms of your initial expectations with what you would put behind the brand, has anything changed there that you feel that you have to step up the support a bit more, given that everyone else is kind of clamoring over the customers right now?

We acquired the Infusium 23, and now the Pert and Sure.

We have put a large amount of money into the budget for advertising, and it actually has paid off very well with our Infusium 23, and hopefully will pay off for Pert and Sure.

So we're very, very satisfied that based on the budgets that we put together for the brands, that we're actually hitting those numbers.

So there's no big surprise about having to spend more than we budgeted, even though everybody's out there looking for business.

But these are not opening price point products; they're middle of the road, and so they're not as price sensitive as some of the opening price points are.

Okay, great.

Thank you very much for answering my questions.

Okay.

Thanks.

(Operator Instructions)

We'll hear next from Mimi Noel with Sidoti & Company.

Please go ahead.

Hi, just a few questions.

Tom, forgive me if I missed this, but could you actually quantify those items in the SG&A line that you called out that are responsible for the bigger increase in this latest quarter?

We did not quantify them.

Would you be willing to do that?

No.

We don't go into that detail.

No, I thought you'd done that in the past.

Am I remembering incorrectly?

We have sometimes, yes.

Okay.

One of the major ones, and we discussed it last year, is in the fourth quarter last year we -- as a result of our impairment, we reversed significant amounts of incentive compensation.

So instead of having an expense, we had a reversal of the expense in the fourth quarter last year.

This quarter, we have the normal ongoing expense, due to the good performance that we had.

So that's one of the major items.

And the -- when we do acquisitions, we have amortizing intangibles.

We've done the Ogilvie, and the Infusium impacted this year, so our amortization is up.

And as we continue to go into -- you know, get a bigger footprint in the liquids area, Infusium and we'll see it with Pert and Sure, we have more advertisement -- advertising.

These type of products require more trade, Mimi, and things like that.

So we will continue to have more advertising as time goes on in our SG&A.

That's helpful, thank you.

I do have one or two more questions.

Regarding OXO, for the year, fiscal 2010, were there any new distribution wins during the year whereby growth was -- as a result was more pronounced than you might typically see?

Go ahead, I'm sorry.

No, I was just going to say, is there any reason why we should see a slowdown in growth in fiscal 2011?

The second part, no, you shouldn't see any decrease in the growth.

As I mentioned, the growth comes from increased distribution within the customers that we sell, because of all of the new products that we sell, and they need more space for those new products, and that's where we're getting growth.

Our major customers are doing very well, and we're projecting nice increases for all of the major customers that do handle the OXO.

Where does OXO stand geographically, in an international realm?

Well, we do sell in countries throughout the world, and we have our own distribution in England.

We also sell -- we have our own distribution in Japan, but we sell in Canada and Australia and Italy, and countries all over the world.

Okay.

You can -- it's not a big part of the business yet, but it's growing.

Is it growing faster than the aggregate?

No, not really.

Okay.

Okay.

And the only last -- oh, actually, one lingering question on OXO.

Any licensing revenue from the brand in this latest quarter?

We did -- this is Tom.

We did have licensing revenue.

It is not significant in their results.

As we've disclosed before we -- during the last year, we entered in an agreement with both Staples and UCB, and we think that is bringing additional exposure to the OXO brand.

Okay.

And where does that fall in the income statement?

It is part of sales.

Okay.

So it does affect the gross margin?

Yes, but it's not --

It's still small?

It's very small.

Okay.

The only last question I have for you, Tom, is do you have a cash from operations number for the quarter, and the CapEx number for the quarter?

The answer is no; but when we file the K, you can figure it out.

Thanks.

Okay, thank you very much.

Mimi, if you are still there --

Yes.

Our EBITDA, as reported in our report today, was $107,754,000, versus last year's $83,623,000.

So we had a pick-up of over $24 million in our EBITDA.

And, you know, you can figure out the cash flow from that because, you know, in our EBITDA you have the interest and the income tax expense, and you can see what that is.

Okay.

So you can probably figure out the cash flow from that.

All right.

Thank you, Gerry.

(Operator Instructions)

We'll hear next from Gary Giblen with Quint, Miller & Co.

Please go ahead.

Good morning, everybody.

Good morning.

The statement in the earnings release about an improving domestic retail environment, does that apply to Housewares as well as Personal Care?

The answer is yes.

We're starting to see some, I guess, some light at the end of the tunnel, that retail sales are picking up and, you know, we're one of them that hopefully will participate in it.

I know you all watch all of the retailers.

You can see all of the numbers there, but it looks like retail sales are starting to improve.

And, I mean, relative to Housewares, where you've been consistently performing well, of course, do you attribute that to a better housing market or just retailer psychology, or what are the main factors?

I think it's everything.

It's possible people cooking more at home, looking for all of the new items that we sell, you know, not buying big ticket items, so they buy items for their kitchen and for their house, and the support that we get from the retailers.

I think it's a little of everything.

Okay.

And then does this latest wave of Wal-Mart rollbacks have any effect on you, in terms of having pushback on price, even though I realize you are the low-cost leader in providing for the mass market, but do you still get some additional pressure from Wal-Mart and others?

Actually, there hasn't been any change there, and no -- the answer is no, nothing's changed there, for our product mix.

Okay.

Great.

Thanks a lot.

Thanks, Gary.

We'll take our next question from Vito Menza with Sandler Capital.

Please go ahead.

Hi, guys, nice quarter.

Just a couple of questions.

First one is, do you still have the $20 million of auction rate securities in your long-term other asset line?

Yes, we do.

Okay.

So if I assume that's -- I know you don't assume it as cash, but if I assume that's cash then, you know, before you did the Pert and Sure acquisitions, you essentially had zero net debt, you entered the quarter with zero net debt, if I count that as cash.

So that implies something around, you know, $50 million of free cash flow this past quarter, which brings your total for the year to around $4.50 per share or $150 million.

My question is this, you haven't had a net cash position or close to a net cash position in a very long time.

You made it apparent that you could still do deals out of basically what amounted to a quarter and-a-half's worth of free cash flow.

So what are the rest of the plans for the cash?

I mean, why are we not doing a share buyback?

As we've talked in the past, the cash flow from Helen of Troy is very, very good compared --

I mean, it's a machine; with growing intangible amortization now, it's a machine.

The disconnect between your reported GAAP EPS and your cash flow is just -- is getting even wider?

And I appreciate that.

We are trying to grow the business, you know, we did, what, $650 million last year, and we're gonna add about $65 million from the [Pert] and Sure.

But we still need to grow the business.

In the real world, we're not as big as we'd like to be and, you know, our Board has decided that the money that we do cash flow with, you know, we want to acquire businesses.

That doesn't mean that we're only using the cash flow to acquire businesses.

As you pointed out, at the end of the year we did have enough -- before we bought the Pert and Sure, we did have enough cash to pay off our complete debt.

As we go forward to next February 28th, that'll be true again, because even though we spent the $69 million, you know, that'll all be coming back to us, and we expect to have, you know, for our budget more cash than we have debt.

So, you know, we're in great shape.

We're a great Company.

You know, I'm glad you mentioned we're a money machine.

We don't look at it that way, but it's nice to think that we're a money machine.

and we are looking for larger acquisitions; we think we ought to be in a larger -- you know, if we don't have any debt and our cash flow is what we project for the future, we need to be a bigger company and acquire more businesses.

I know we've talked about, you know, buying back the stock.

At the present time that's still on the agenda, but we believe that we can make more money by using our cash and debt, if we needed more, to acquire companies, than to use it to buy back the stock.

I mean, you know, from a shareholder, it feels like there could be a happy balance between the two.

This Pert and Sure acquisition looks like a gem, from what you have disclosed thus far, but again, you did with basically a quarter and and-a-half's worth of free cash flow.

How, from a shareholder's perspective, do we get comfortable that, one you're shareholder-friendly, and two, you are not going to go out and waste the money on a silly large acquisition?

These little tuck-ins are perfect, and you're good at them.

I'd like to think after all these years we're not silly businessmen.

There are so many acquisitions that come across our desk every week, and we are very selective.

We just happen, you know, I guess to be lucky to wait around for Pert and Sure to come aboard, and we're growing our business.

If you look back at the OXO business that we bought five, six years ago, it's more than -- worldwide, more than two and-a-half times today in sales and profit than it was when we first purchased it.

And so, you know, I believe we're good businessmen.

We're conservative, you know, we're not going to buy some silly acquisition just to have increased numbers that don't mean anything.

We're very profit-oriented.

Every acquisition must be accretive, and must bring us a good profit.

If you'd figured out, which we don't tell you, but if you figured out the Pert and Sure, that was a heck of a good acquisition for us, just as well as the Infusium.

So the last two, if you looked at it, and we don't disclose it, based on EBITDA ratios, it was one heck of a -- both great buys.

That's what we're looking at.

We're looking at -- we have money, and there's a lot of companies out there for sale; and a lot of times, people who want to buy just can't raise the money, and we can.

So we think we're in a good position for acquisitions.

Hopefully we'll be smart in the future and grow the business, and grow the profit, and grow the net earnings; and you as a shareholder and all of the others will benefit from the increased share price.

Gerry, just turning the subject a little bit just to the Personal Care segment, and Tools in particular, could you just speak a little bit about shelf space and plan-a-grams, and how does it look going forward?

Has any share been lost?

Has any share been gained?

And obviously, the consumer environment has improved, and we're hearing anecdotally of restocking; how come Helen of Troy's business won't participate in that, the appliance business particularly?

I think we're participating.

I visited one of our major customers, one of our big appliance customers, and they were telling me that Helen of Troy is the shining light in their department; that we are the ones showing the increases over our competitors.

It's just -- I guess it's just a tough environment.

But we, as we go forward, we think our plan-a-grams, some of them have been set, some have not been set.

Some of our major customers, the plan-a-gram set doesn't come until late June, and it used to come in February.

We believe we have more SKUs there than our competition.

We have more than we had before, and looking forward to the future being very good.

We have a lot of new products, and that's gonna turn into sales and profit for us.

We're very optimistic.

As I mentioned last quarter, and I'll mention again, we're looking for this year to be the biggest year for sales and profit in Helen of Troy's history, and certainly look forward to that coming.

Okay.

Well, you said it before, the Pert and Sure deal, so I guess maybe now you feel even better about that statement?

Is that a fair statement?

Yes.

Now I can sleep at night.

I feel comfortable with that statement.

Okay, guys.

Good luck.

We'll be in touch.

Thank you.

Gentlemen, seeing no further questions in our queue, I'll turn things back over to you for any additional or closing comments.

If there are no other questions for us, I wanted to thank everybody for participating in our fourth quarter and year end results, and we look forward to speaking with you in a few months when we come out with our first quarter earnings report.

Thank you again for calling in.

Thank you.

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This concludes our conference call for today.

Thank you all for participating, and have a nice day.

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