Helen of Troy Ltd (HELE) 2019 Q4 法說會逐字稿

Good day, ladies and gentlemen and welcome to the Helen of Troy Limited Fourth Quarter 2019 Earnings Call.

Today's conference is being recorded.

At this time, I'd like to turn the conference over to Jack Jancin, Senior Vice President of Corporate Business Development.

You may begin.

Thank you, operator.

Good morning, everyone, and welcome to Helen of Troy's Fourth Quarter and Fiscal 2019 Year Earnings Conference Call.

The agenda for the call this morning 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 accomplishments of the year and outline areas of focus for fiscal 2020; then Mr. Brian Grass, the company's CFO, will review the financials in more detail and comment on the company's outlook for fiscal 2020.

Following this, Mr. Mininberg and Mr. Grass will take 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 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 Investor Relations section of the company's website at www.helenoftroy.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 homepage and then the News tab.

I will now turn the conference call over to Mr. Mininberg.

Thanks, Jack, and good morning, everyone.

Thanks for joining us today.

Welcome to our call.

My comments today will focus on 3 areas: First, I will discuss our fourth quarter and full year results, then I'll share the progress on Helen of Troy's multi-year transformation strategy as today's release marks the conclusion of Phase I, which began 5 years ago in fiscal 2015.

Finally, I will provide a few thoughts on Phase II of Helen of Troy's transformation in advance of our upcoming Investor Day on May 21.

Brian will then share a deep review into our financials, including our outlook for fiscal '20.

Following that, we'll open up the line for Q&A.

The fourth quarter finished well ahead of expectations.

All told, core sales were flat against a particularly difficult comparison in which sales grew 11.3% in the same period last year, a tribute to the strength of our diversified portfolio.

Online sales led the way, up approximately 36% year-over-year, outstanding.

We are pleased to report Beauty net sales exceeded our expectations driven by exceptionally strong hair appliance growth.

Housewares also over delivered, up 7.8% climbing over its high year ago base.

This momentum more than offset the lower sales we expected in our Health & Home segment, which faced a tough comparison to last year's especially robust cough/cold/flu season.

Adjusted operating margin improved by 30 basis points and adjusted diluted EPS increased 7.7% even as we continue to make incremental investment behind our leadership brands and felt the impact of tariff increases and higher transportation costs.

Speaking of tariffs, the pricing matters discussed during our last call are now largely resolved.

Brian will speak to this during his remarks.

This quarter caps great full year results.

Net sales for the full fiscal -- for the full fiscal year 2019, grew 5.8%, Leadership Brands grew 8.9%, online sales grew approximately 28% and adjusted diluted EPS grew 11.3%.

The investment in our Leadership Brands continued to pay off focusing primarily on digital marketing, e-commerce and new product development.

Incremental investment levels in these areas were up year-over-year in line with the outlook we gave at the beginning of fiscal 2019.

Amazon continues to grow and is now our #2 customer accounting for approximately 16% of revenue during the fiscal year.

In the aggregate, all other e-commerce sales grew similarly in fiscal 2019.

We also invested further in our Asia-Pacific sourcing operations, our distribution centers and other shared services.

Careful stewardship and allocation of capital was also a hallmark of fiscal 2019.

Inventory turns improved and return on investing capital net of restructuring was a healthy 14.6%.

During the year, we also returned $212 million to shareholders through share repurchase.

Turning now to our business segments.

I'd like to start with Beauty, which delivered a great quarter and another positive year in the appliance business.

Beauty core sales increased 13.7% in the fourth quarter and grew 0.2% for the full year.

Fiscal 2019 marks the second consecutive year of growth for the Beauty appliance business.

The stabilization efforts in Beauty appliances started 4 years ago as we invested in innovation and much better branding.

We also exited businesses with lower margin and lower potential.

Over the past 2 years, the efforts to drive appliances have accelerated under strong new leadership, and with even more focus on developing the online channel, digital marketing and new products for the retail and professional market as well as further improvement to the caliber of our organization.

Similar efforts were also made internationally along with some moves specific to the EMEA market all leading to growth in Europe.

During fiscal 2019, we broadened our portfolio by introducing Hot Tools signature series in the U.S. retail channel, tapping into the significant heritage of our Hot Tools professional brand.

Early data suggest that the signature series is being well received by customers and consumers.

We also launched new Hot Tools products for the pro market, which serves salon stylists and those consumers seeking professional products.

On Revlon, we dialed up investment in our greatly improved digital marketing efforts to support new, innovative consumer-centric appliances at retail in brick-and-mortar and online.

We have been growing our share of the online market for appliances for the past 2 years and it accelerated in the fourth quarter of fiscal 2019.

Recent third-party data shows that Revlon is now the online market share leader in hair appliances.

At last month's International Home and Houseware Show in Chicago, our Revlon hair appliance brand was recognized by the NPD Group winning an award for largest increase in online buyer reach for calendar year 2018.

This is further testament that Beauty has been catching up rapidly to the overall Helen of Troy online sales rate through a powerful combination of products that delight consumers by satisfying their needs for fast, excellent, one-step styling, a successful marketing campaign and significant earned media attention.

As our focus on Beauty appliances continues to sharpen, we issued a press release last month confirming we are exploring the potential divestiture of the personal care business, a subset of our Beauty segment.

The process is progressing, and we will share more in the future as appropriate.

Looking forward, we expect Beauty to continue its trend towards stabilization and expect our appliances business to show a third consecutive year of growth in fiscal 2020 behind new product innovations and upgraded portfolio, further investment in marketing, particularly digital; additional focus on EMEA and new efforts in Asia.

In Health & Home, our largest and most global business, we continue to make positive gains domestically, internationally, online and in-store, despite a fourth quarter decline due to the tough year-over-year comparison.

On a full fiscal year basis, the segment's core sales grew solidly, up 3.1% year-over-year and adjusted operating margin improved 0.7 percentage points.

This was especially strong coming on top of the 7.9% revenue growth in this segment in fiscal 2018, which benefited from several items, favorable ones, such as a robust cough/cold/flu season and prolonged cold weather.

Seasonal products such as air purifiers, fans and heaters continued to perform well in this segment, behind new products, incremental distribution and shelf space gains at existing domestic customers.

Health & Home continues to distinguish itself with awards for its innovation and go-to-market excellence.

We are pleased to report that our Braun ear thermometer was recently recognized with a prestigious European Stiftung Warentest award known as STIWA in Germany and other EU countries where consumers place a high value on strong ratings and recommendations from this organization.

The rigorous test from this highly respected independent consumer agency compares product usefulness, functionality and environmental impact.

Our Braun team was also recognized by Procter & Gamble last month earning P&G's trademark licensing partner of the year award, which marks the seventh licensing excellence award we have earned from P&G over the past 12 years.

I'm very happy to share news that reflects also on the strength of our Health & Home leadership team and our careful attention to long-term succession planning.

Jon Kosheff retired as President of our Health & Home segment on March 1, 2019.

John distinguished himself during his 12-year tenure, the last 5 of which he led the segment.

From our strong branch, we are pleased to promote Christophe Coudray to succeed Jon.

Christophe has been with Health & Home for 11 years, working side by side with Jon as a key contributor to the segment's strong business results.

Christophe led marketing, new product development and the fast-growing Asia business.

He has excellent domestic and international credentials, spending nearly 25 years between Gillette and P&G, where he worked on multiple brands, including Braun and Oral-B across several regions.

Christophe now serves on our global leadership team and reports directly to me.

Our Houseware segment delivered an impressive fourth quarter with core sales up 8.1% against a very strong year ago compare.

Core sales grew 14.1% for the fiscal year as both OXO and Hydro Flask finished strong and posted healthy growth.

This reflects outstanding execution and healthy business fundamentals.

Our investment in innovation, new distribution, marketing and e-commerce are working and providing good results.

We continue to win with consumers and customers domestically, internationally, online and in brick-and-mortar.

Like Beauty, OXO was also recognized by the NPD Group during last month's International Home and Housewares Show, earning NPD's award for top increase in market share in food storage for calendar year 2018.

In addition, OXO continued to be recognized for its excellence in universal design, now increasingly on an international level as we further expand the brand overseas.

This past February, OXO earned 4 German Design Council awards.

Hydro Flask delivered excellent sales growth for the quarter and full fiscal year.

Sell-through rates continue to climb and according to third-party syndicated data, added further market share growth to its #1 position in metal beverage bottles.

Sales continue to track in line with customer order replenishment and trade inventory remains healthy.

Consumer demand in the holiday season and throughout the quarter remained strong.

Hydro Flask's robust growth in the fourth quarter reflects our efforts to increase distribution, particularly in the Eastern United States.

The brand has become a much more widely available in the East, is rapidly increasing its awareness and is well-loved by consumers.

Hydro Flask continues to introduce new products and grow internationally.

In February, we began shipping our 2019 spring collection, which furthered our strategy of going beyond the bottle.

New products include portable soft-sided coolers, an innovative cooler cup and new accessories.

Of course, we also added to our market-leading bottle lineup with new products and new colors.

Customer reaction has been very positive, and we are strongly supporting launches with digital and in-store marketing.

Additionally just last month, an international panel awarded Hydro Flask 4 coveted 2019 iF DESIGN AWARD for the new soft cooler pack, the new soft cooler tote, the new straw lid and the new cooler cup.

As we report the results of fiscal '19, I would now like to take a step back and speak to the progress made on our multi-year transformation.

Fiscal 2019 marks the successful completion of Phase I of our transformation strategy delivering excellent performance across a wide range of measures.

Back in May of 2015, we laid out an ambitious 5-year plan guided by 7 strategic choices.

The plan was intended to transform Helen of Troy into a faster growing, consumer-centric operating company, unified by a common culture.

All designs delivered much higher profitability, long-term shareholder value and major improvements on our business organization and shared services.

Global leadership team was formed and our worldwide associates were deployed to execute with excellence.

We are proud to report our Phase I results.

Over the past 5 years, our net sales, CAGR improved to 3.7% and accelerated to 4.2% in the past 3 years.

Adjusted operating margin expanded by 1.3 percentage points and adjusted diluted EPS grew at a CAGR of 12.4%.

We improved sales growth by focusing on our Leadership Brands, made strategic acquisitions, became a much more efficient and effective operating company, improved inventory turns and return on invested capital and returned capital to shareholders.

The powerful combination of operating leverage, 2.2 points of improved gross margin and operating efficiencies unlocked by our shared services structure allowed us to nearly double investment in our Leadership Brands.

This investment primarily focused on consumer-centric innovation, digital marketing and expansion into the e-commerce channel.

As a result, Leadership Brands now represent approximately 80% of the company's sales for fiscal 2019.

Free cash flow grew by a CAGR of 8.9% during Phase I, a product of improved earnings, lean CapEx and higher inventory turns, which improved to 3.3x up 0.5 turn from the end of fiscal '14.

We deployed that cash flow into acquisition and returned excess capital to shareholders through share buybacks, yet maintained conservative levels of debt, positioning us well to add new Leadership Brands into our greatly improved operating structure.

Return on invested capital was 14.6% in fiscal 2019, more than a doubling the spread versus our cost of capital since fiscal 2014.

To deliver these external results, we also worked hard at internal transformation.

We reorganized each of our business segments to focus on sales, marketing and new product development for our Leadership Brands and added new products, such as -- new brands such as Hydro Flask.

We integrated most everything else into a set of global shared services, which in turn were majorly rebuilt to support the businesses better and cheaper.

This included upgrading our supply chain, HR, IT, legal and finance and attacking waste in every part of the company to improve cost, quality, speed and capability.

We also upgraded the caliber of our organization, unifying, engaging and energizing our associates into a highly collaborative global team by cultivating a new culture and overhauled every major people system in the company.

This made us more of an employer of choice and helped us attract new top talent and retain existing high performers.

We also focused on becoming much more shareholder-friendly and better stewarding our assets for greatly improved long-term value creation.

Our global team of passionate associates deserves all the credit for these results.

They are more passionate, engaged, and committed than ever.

Every day, they are obsessed with delighting consumers with world-class brands and innovative products, delivering operational excellence and building ever-stronger and more efficient shared services.

I would like to close my comments today with a few thoughts on Phase II.

As proud as I am of our organization for their work in Phase I, I am most inspired by what lies ahead.

Phase II is designed to drive the next 5 years of progress.

Like Phase II, executing our Phase II strategic choices will be the root of everything we do.

Our overall goals are to continue winning with our brands, with consumers, with our businesses and with our organization, all with a sharp eye on creating additional long-term shareholder value.

We will outline specific long-term targets regarding sales growth, margin expansion, EPS growth and other key measures in our Investor Day, next month.

The Phase II strategies include continued investment in our Leadership Brands with a focus on growing through consumer-centric innovation, expanding more aggressively outside of the United States and adding new brands through acquisition.

We planned to build further shared service capability and operating efficiency as well as attracting, retaining, unifying and training the best people.

We have already begun implementation, critical projects are underway all around the company, intended to deliver on our next set of long-term goals.

I look forward to building on our track record of results and value creation alongside our talented team of global associates.

In short, I believe the best is yet to come for Helen of Troy.

With that, I will now turn the call over to Brian.

Thank you, Julien, good morning, everyone.

Before discussing the quarter in more detail, I'd like to start with a few broad points.

First, my comments today will be regarding our results from continuing operations for the fourth quarter and full fiscal year 2019 compared to the same period last year unless otherwise indicated.

Second, just a reminder that the first quarter of fiscal 2019, we adopted the new revenue recognition accounting standard.

As a result, we have reclassified certain expenses from SG&A to a reduction of net sales revenue.

Corresponding amounts in the prior periods have been reclassified to conform with the current period presentation so that both periods are comparable.

Please see the table and footnotes in the press release for further information.

Finally, a few comments on tariffs.

As highlighted on the third quarter call, the bulk of our pricing actions did not become effective until the end of fiscal 2019 or early fiscal 2020 due to the negotiation and notice periods involved in taking pricing actions with customers.

As such in line with our stated expectations, we absorbed an adverse impact to cost of goods sold in the fourth quarter.

In total, the net unmitigated tariff impact that we absorbed during fiscal 2019 was approximately $4 million.

We are pleased to report that we have now largely completed pricing action and other mitigation actions with our customers and do not expect any meaningful adverse gross profit dollar impact from tariffs going forward assuming the status quo remains in effect.

Turning to review of the quarter, we achieved strong results with adjusted diluted EPS above our expectations, largely due to stronger-than-expected net sales in Housewares and Beauty as well as overall favorability in SG&A.

During the fourth quarter of fiscal 2019, we aligned our Health & Home spending with cough/cold/flu season demand, which was well below the same period last year.

Conversely, in the Beauty segment, we saw strengths in several product lines and made incremental investments behind them.

We also made incremental investment in Housewares behind attractive opportunities in OXO and Hydro Flask.

Net-net, we increased our total year-over-year advertising spend in the fourth quarter but also deferred some spending into early fiscal 2020.

Consolidated sales revenue was $384.8 million, a 0.7% decrease over the prior year, driven by unfavorable foreign currency fluctuations of approximately $2.6 million or 0.7%.

Our core business net sales were flat as we benefited from strong growth in Housewares and Beauty.

Sales in the online channel grew approximately 36% year-over-year to now comprise approximately 20% of our consolidated net sales in the fourth quarter.

These factors were offset by a decline in our Health & Home segment due to the unfavorable comparison to the fourth quarter of fiscal 2018, which benefited from high cough/cold/flu incidents along with unseasonably cold fall and winter weather.

Housewares' net sales increased 7.8% as the segment continues to see strengths in both the OXO and Hydro Flask brands particularly online.

Health & Home net sales decreased 11.7% in line with our expectations, which reflect the difficult comparison to the fourth quarter of last year that I just mentioned.

Segment net sales were also unfavorably impacted by net foreign currency fluctuations of $1.7 million or 0.9%.

These factors were partially offset by seasonal category growth, including incremental distribution gains with existing customers and new product introductions.

Beauty net sales increased 13.1%, primarily due to growth in the online channel, new product introductions in the appliance category and an increase in international sales, partially offset by a decline in personal care and the discontinuation of certain brands and products.

Consolidated gross profit margin was 40.9% compared to 40.8% for the same period last year.

The 0.1 percentage point increase is primarily due to a more favorable product mix and negotiated product cost reductions, partially offset by the margin impact from a decline in overall Leadership Brand sales, higher inbound freight costs and the net impact of tariff increases.

SG&A was 29.2% of net sales compared to 29.5% for the same period last year.

The 0.3 percentage point decrease is primarily due to the favorable comparative impact of foreign currency exchange and forward contract settlements and lower amortization expense, partially offset by higher freight costs, increased share-based compensation expense and higher overall advertising expense.

GAAP operating income was $44.1 million or 11.1% of net sales.

This compares to $31.4 million or 8.1% of net sales in the same period last year, which included a pretax noncash asset impairment charge of $11.4 million.

Adjusted operating income was $53.5 million or 13.9% of net sales compared to $52.7 million or 13.6% of net sales.

Turning now to adjusted operating margin by segment.

Housewares adjusted operating margin was 18.1% compared to 17.4%.

The 0.7 percentage point increase primarily reflects the margin impact of more favorable product mix and negotiated product cost decreases.

These factors were partially offset by higher rent expense related to new office space, an increase in advertising expense and higher freight expense.

Health & Home adjusted operating margin was 12.6% compared to 9.1%.

The 3.5 percentage point increase primarily reflects lower advertising expense, lower incentive compensation expense and favorable foreign currency exchange and forward contract settlements.

These factors were partially offset by a less favorable product mix, tariff increases and higher freight expense.

Beauty adjusted operating margin was 10.4% compared to 18.6%.

The 8.2 percentage point decrease is primarily due to the unfavorable margin impact from the decline in Personal Care, higher advertising expense and higher freight expense.

In addition to the broader industry trend of higher freights year-over-year, the segment elected to incur higher logistics expense in the quarter in an effort to keep up the strong demand for several of its products.

Our effective tax rate was 7.9% compared to 70.6% for the same period last year point.

The lower effective tax rate reflects the favorable comparative impact of a onetime charge of $17.9 million last year related to 2018 U.S. tax reform.

Income from continuing operations was $37.7 million or $1.47 per share and includes $0.04 per share in after-tax restructuring charges.

This compares to income from continuing operations of $8.4 million or $0.31 per share in the same period last year, which included a total of $1.07 per share in tax reform, impairment and restructuring charges.

Non-GAAP adjusted income from continuing operations was $46.6 million or $1.82 per share compared to $45.7 million or $1.69 per share, which represents a 7.7% increase in adjusted diluted EPS despite the unfavorable tariff impact and increased advertising spend year-over-year.

Loss from discontinued operations was $0.4 million compared to income from discontinued operations of $51.7 million in the same period last year.

Income in the fourth quarter fiscal 2018 primarily reflects the tax benefit of $49.2 million related to noncash asset impairment charges in the Nutritional Supplements segment.

Now moving on to our financial position.

Accounts receivable turnover increased to 68.3 days for fiscal 2019 compared to 62.7 days in the same period last year.

Turnover is an average trailing 12-month calculation and the increase primarily reflects the timing of revenue growth and cash collections period-over-period.

Our accounts receivable balance at the end of fiscal 2019 was $280 million, which is in line with the balance of $276 million at the same time last year.

Inventory was $302.3 million compared to $251.5 million at the same time last year.

The increase primarily reflects the impact from the comparatively weaker cough/cold/flu season, the maintenance of temporarily higher inventory levels to avoid any potential disruption in supply as we make strategic supplier consolidations in certain parts of our business and integrate Hydro Flask into our distribution center as well as higher trade inventory in Asia-Pacific e-commerce channel.

We believe inventory in Asia-Pacific e-commerce channel has now returned to healthier levels and customer order patterns appear to be largely aligned with consumption.

Trailing 12-month inventory turnover improved to 3.3x compared to 3x in the prior year period.

Net cash provided by operating activities from continuing operations for fiscal 2019 decreased $18 million to $200.6 million.

The decrease was primarily driven by an increase in cash used for inventory and a dispute settlement payment of $15 million made earlier in fiscal 2019.

These factors were partially offset by an increase in income from continuing operations and higher noncash share-based compensation.

Total short- and long-term debt was $320.8 million compared to $289.9 million at the end of the fourth quarter last year.

Our leverage ratio was 1.3x for the fourth quarter fiscal 2019, flat for 2018.

During the fourth quarter, we repurchased 655,000 shares for our common stock in the open market for $75 million or an average price of less than $115 per share.

For the full fiscal year, we repurchased 1.9 million common shares in the open market for approximately $212 million.

Over the last 5 years, we have repurchased $751 million of our common stock in aggregate.

Taking a step back from the quarter, we're proud of our results over the last year.

We believe we over delivered on our commitments to our shareholders while investing in the short- and long-term health of our businesses and absorbing unprecedented tariff increases.

Looking at the last 2 years, we've delivered 2 consecutive years of 5.8% growth that is almost entirely organic.

We also expanded our operating margin and grew adjusted EPS by 11% each year.

As we continue to adapt to the dynamic omni-channel and retail environment and quickly capitalized on our opportunities, we are subject to volatility in our quarterly results.

Despite this volatility, we're pleased with our operational execution and ability to achieve consistent annual results and expect to continue to prioritize annual performance and the long-term health for our businesses.

Reflecting on the last -- past 5 years, I'm proud of what we accomplished during Phase I and I'm excited for Phase II.

We continue to improve our businesses, our global team and our shared service functions.

We've created a more integrated, more effective and more efficient organization that is better equipped to navigate and succeed in a dynamic business environment to adapt to changes in the trade landscape and to successfully integrate potential acquisitions.

We also believe we've optimized our debt structure to match our strategic objectives in a cost-effective way, and we continue to be well positioned to deploy meaningful capital with lower, relative risk due to our low leverage and strong cash flow.

Our expectations for fiscal 2020 reflect our progress as well as our belief in our ability to generate organic growth in the next phase of our transformation.

For fiscal 2020, we expect consolidated net sales revenue in the range of $1.58 billion to $1.611 billion, which implies consolidated sales growth of 1% to 3% and a 3-year sales growth CAGR of 4.2% to 4.9%, which is almost entirely organic.

Our net sales outlook reflects the following expectations by segment.

Housewares net sales growth of 4% to 6%, which implies a 3-year CAGR of 9.2% to 9.9%.

Health & Home net sales growth of 2% to 3%, which implies a 3-year CAGR of 4.2% to 4.5%, and a Beauty net sales decline in the low single digits, which includes the expectation for a third conservative year of growth in our appliance business.

We expect consolidated GAAP diluted EPS from continuing operations of $6.83 to $7 and non-GAAP adjusted diluted EPS from continuing operations in the range of $8.25 to $8.50, which excludes any asset impairment charges, restructuring charges, share-based compensation expense and intangible asset amortization expense.

Our net sales and diluted EPS outlook assumes the severity of the cough/cold/flu season will be in line with historical averages and that March 2019 foreign currency exchange rates will remain constant for the remainder of this fiscal year.

Our diluted EPS outlook is based on an estimated weighted average diluted shares outstanding of 25.4 million.

The year-over-year comparison of adjusted diluted EPS from continuing operations is impacted by expected increase in growth investments of 10% to 15%.

We expect adjusted EPS growth for fiscal 2020 to be concentrated in the second half of the year due to the strong performance comparison and specific events in the first half of fiscal 2019 as well as the pattern of planned investment spending, which will be more heavily weighted in the first half of fiscal 2020 compared to fiscal 2019.

We expect the decline in adjusted EPS for the first half of fiscal 2020 of 4% to 8% year-over-year.

We expect the decline to be heavily concentrated in the first quarter, primarily due to strong prior year cough/cold/flu incidents that had a favorable impact into the first quarter of fiscal 2019, which we do not expect in fiscal 2020.

Strong international e-commerce sales in the first quarter of fiscal 2019 that we expect to grow more evenly across fiscal 2020.

Club channel pipeline fill-in sales during the first quarter of fiscal 2019 not expected to repeat in the first quarter of fiscal 2020.

The acceleration of Hydro Flask orders into the first quarter of fiscal 2019 in advance of the integration into our ERP system and the unfavorable comparative impact year-over-year of advertising and new product development expenses.

We expect a reported GAAP effective tax range of 9.5% to 11.5% and an adjusted effective tax rate range of 8.8% to 10.5% for the full fiscal year 2020.

The likelihood and potential impact of any fiscal 2020 acquisitions and divestitures, future asset impairment charges, future foreign currency fluctuations or further share repurchases are unknown and cannot be reasonably estimated, therefore, they are not included in our sales earnings outlook.

Now, I'd like to turn it back to the operator for questions.

(Operator Instructions) We'll take our first question from Bob Labick with CJS Securities.

Congratulations on a nice fiscal '19 and nice outlook for fiscal '20 and beyond.

Thanks, Bob, Appreciate it.

Nice to talk to you.

We're very proud of the results.

Yes, no.

Good stuff.

I wanted to start with Personal Care if you can.

If you can't, we can skip the question, but if you could give us any sense of kind of process time, your expectations or maybe even like rough sales and margin level, any kind of color around the potential process going on?

Yes, Bob, we're pretty limited on the ability to talk to this one because we're in the exploratory process.

I'll turn it over to Jack if he can give any color, but we won't able to give the kind of detail that I know you're asking about.

Yes.

Exactly what Julien said, we're in the middle of a process so we'll have more to say at some point in time in the future about that process.

I think from a sales standpoint, we've shared in the past in our presentation it's roughly of the Beauty segment in that 25% to 30% range and beyond that, we generally don't disclose much more than that.

Although we have told you that generally, the margins on the business are higher than the [elementary] average on that particular piece of business.

Got it.

Okay.

Terrific.

I appreciate the color that you can give.

Sticking with the Beauty segment, obviously, really strong strength in the appliances last couple of years, but in the quarter in particular.

Can you talk about the -- was there like one kind of event in the quarter that led to this strength because obviously you're still looking for a decline in overall Beauty, next year?

Was this a sell-in?

Was this a new product or -- a little more color and characterize the appliances' strength and outlook, please?

Yes, I can speak to both parts of it, the appliances and also the year-over-year in the forward-looking outlook section.

So in appliances, since we don't break out the subsegments of each division, the appliances I think have gotten a bit of a bad rap over the last couple of years because the turnaround efforts have been substantial.

We've talked about them on many of our calls but nonetheless at a macro level.

What folks see is that, that Beauty has been in decline.

So now that we're exploring the potential sale for Personal Care and appliances have put a second consecutive year of growth on the board.

I think it's time to shine the light, so we did that.

And frankly, we expect it to continue in fiscal '20.

So if you look at what's driving it, there's been some pretty fundamental work done.

You've been with us a long time so you probably remember me speaking about a major change and step-up in innovation and rebranding in Beauty 3 or 4 years ago.

That took a while to get into the marketplace.

We've had some hits and also a few misses and over time, we've gotten better and better on the marketing side.

We put much more money into it.

And over the last 2 years, under the leadership of our new President, things have really stepped up and the acceleration is now showing beautifully, specifically in Revlon, we have some new products that now combine with a pretty phenomenal digital marketing campaign.

The products themselves are just winners.

And the blogosphere and social media and other earned media attention has grown explosively.

Third-party data shows that our online share has just been growing like a weed over those 2 years and especially over the last quarter or 2 and the result is that market leadership position online now for Revlon as these products kick in and 1 or 2 in particular.

We have also expended Hot Tools now into the retail market through a signature series, a special line for retail consumers.

Retailers have been asking for something like this for several years, and we finally found a way to do it and bring the Hot Tools heritage, a retail version of those pro-grade products that's distinct from the professional products and now also the right support behind it.

We fueled that project that we had done on the restructuring side over the last 2 years was aggressively embraced to fuel all of this.

That's why frankly, we gave it that name, and we've upgraded the organization as well and the room to do that made a huge difference to these results.

In terms of the year-over-year and by the way, we like our prospects on the product development side.

Signature series is getting traction.

We like what we see so far, and we are feeding the successes on the Revlon side, so like our prospects of what we've done, we think it's not finished.

And in the case of the year-over-year, it really depends how Personal Care is going to play out during the course of next year and some of these things that we just mentioned on the appliance side.

So net-net, if you weigh the 2 against each other, what we see is what's in the guidance that we put out in the press release today that we emphasize that the appliance side should continue to win in fiscal '20

But Bob, let me just add that so to directly maybe try to talk about the year-over-year comparison, some of it's coming from Personal Care and the trend that, that we see in that business, and then some of it's coming from the pipeline fill-in related to Hot Tools signature series.

So there is pipeline fill-in related to that product line that we're not anticipating that the lump of -- in fiscal 2020.

Those are the 2 primary components of the year-over-year.

Got it.

Okay.

And then one last one and I'll hop back in queue.

Just in terms of -- you'll probably expand upon this next month, but maybe if you can tease us a little bit with the opportunities for international growth.

You've talked about it a bit.

Can you talk maybe what you have -- you need to do to change?

And what is it for all of your Leadership Brands?

Are there -- are you going to start focusing on individual brands?

Or how do you intend to what I think you have been saying is accelerate international growth?

Yes.

So it's a great question, I'll say a little here.

We'll have more to say in New York when we do our Investor Day on the 21st of May.

And so a little bit here.

If you look at Phase I of the transformation and, frankly, the history of Helen of Troy, Helen of Troy is not focused as extensively on its international business as it is domestically.

We have a nice footprint and Health & Home is our biggest international play, and we have been expanding in the other business units, but not with force.

We focused in other areas and that's all the stuff you've heard us talk for the last 5 years with Phase I. The work that was done to create the shared services platform and now, the bigger, more unified operating company makes it possible to really double down in places like Europe and Asia, where we have seen growth and the growth has been impressive and the profitability improvement's also and that said, it's coming more in Health & Home in Phase I than from the other business units.

With the unification at the leadership team level, the cultural stuff that you often hear me talk about and the shared services capability, it's now possible to reorganize and bring a multi-business unit effort across the major geographies outside of the U.S. and that's where that double down idea comes from.

And if you really look at the specifics, the products, the categories, the ability to use the online channel, which has gotten much sharper at Helen of Troy in the last few years and then the underlying compensation system in other unifiers that are in the company, it's just a huge opportunity.

So we're ready now.

I think if we had chosen it, in Phase I, we wouldn't have been able to eat all that was on the plate and do that too.

You just heard in the results that we gave that, that we're proud of what we did do in Phase I, and we're ready now to add this component.

There are 2 very big projects, active in the company: One in Asia, one in Europe that are designed to walk the talk on what I just said, and over the next couple of years, we'll play those out across the business units, across the regions, and we think we have some pretty good organic growth possibilities before potential for acquisition.

We'll take our next question from Frank Camma with Sidoti.

You gave some comments around the tariffs and it sounds like obviously it's definitely not as big of a concern as sort of when we initially flagged it.

Can you talk a little more, and I think your comments mostly were around the cost side and the pricing, but can you talk specifically about whether you think it will or has affected consumer demand as far as that pricing increase?

Yes.

Good.

Thanks for the question and also your assessment, which we concur with which is I believe that while tariffs are important, changes cost of goods, changes margin structures, it changes our approach to our sourcing at times, and it can change pricing in the marketplace.

I believe that in the last 90 days, 180 days, the market is greatly overvalued.

Those concerns, we said in the last call that we would take pricing, we have.

It's largely resolved at this point, even the small bumps that we have.

It's very common by the way in price increases that there is some lumpiness in implementation.

In fact, I've been doing this for more than 30 years and I've done a lot of pricing in my days and many other people at Helen of Troy and I don't think it's a stretch to say that there's always a few bumps as you put pricing into the marketplace, especially across a broad portfolio, lots of customers, lots of categories and lots of channels.

I think this one for us was especially well done, and we like where we are.

In terms of the impact on consumer shelf prices, which I think is what you're asking about, it's a little too soon to know what impact it will have.

We are encouraged by seeing other companies who have also been in the same position to take pricing.

We're very pleased with the trade's response to try to contain the shelf price increases as best as possible through our efficiencies, through their efficiencies, et cetera.

And the consumers deserve that.

And in terms of the impact it will have, we're not seeing a significant impact today, but it also may still be a little early as this stuff rolls in due to the fact that the trade may still own a little bit of inventory at the old prices and is always that who's going to move first and how much back and forth as that same lumpiness then sorts itself out on the shelf.

Okay.

Got it.

And moving back to Beauty, and you spent some time on this, but obviously that was my biggest variance.

It just sort of absolute dollar amount the $10 million increase, was there any timing issues there or pull forward from Q1 or things that we should know about like sell-in that positively impacted the quarter there, that might not occur year-over-year that we should watch out for?

Yes.

I wouldn't be too concerned to Bob's question earlier.

It's true that when you launch something new, and it's designed to make an impact then year-over-year you have to anniversary it.

So there is that mathematical truth.

That said, it also gets new distribution, starts to sell through, so you get replenishment and since the early data is strong, we're encouraged.

It's a little soon to know how big those will be and how much extra distribution will get, how fast the replenishment orders will be so to be able to estimate the ability to anniversary the sell-in and grow at X rate, it's hard to give a number.

I think that's what you're looking for, maybe for modeling purposes.

I wouldn't worry about it much, I guess, is the point.

And the reason I say it is that the appliances are expected to grow in the year.

So if that's true, then no matter what the number is there'll just be more of it, by the time the year is finished.

I think the real question is it going to be enough to offset the trend that we're seeing in Personal Care, which is why you see a net small low single-digit downward guidance for the year.

Maybe for perspective, we went into fiscal '19 similarly with a small downward guidance and some other good initiatives in appliances just did well during the year, and we ended up with that plus 0.2 in the core for Beauty that we just reported.

I'm not saying that we're going to beat the guidance we just gave, I'm not saying it at all.

I'm simply saying that we're working very hard to create the momentum you heard all the drivers of it.

That's why I just wouldn't worry too much.

In terms of the ability to anniversary, I'm very confident, and we like the traction that it's getting, so that's why I'm telling you the answer this way

Okay.

And last question just on Housewares and this is not something uncommon, but like your fourth quarter tends to be your lowest, adjusted operating marginal at least the last 2 years, I guess.

Why would that be if you're selling, I would have thought you do a lot of -- don't you do the club stuff sort of in the first quarter.

I'm trying to figure out like why that would tend to be a lower adjusted operating...

Yes.

I'll say a little and then leave it to Brian.

Club moves around.

I wouldn't have this idea that club is a Q1 thing.

It's true that, that happened in fiscal '19 and that's why Brian went out of his way in his comments about the anniversary for Q1 because it's true, that you're right that there was a bunch of club, a channel that we love by the way.

There's certain kinds of shoppers, certain kinds of items that go into club and just do well, big sets, bonus packs those kind of thing, that are not necessarily the right SKUs for other channels.

And it just so happened, it was a big slug event early in fiscal '19 that's why that compare comment that Brian made.

But if you look at club broadly, it can be in any quarter.

And in terms of the margin specifics quarter-by-quarter, Brian, I don't know if you have some color there?

I think that -- and again there's no real pattern, I don't think, but it has more to do with our advertising spend in the specific programs and events and rollouts and launches that occur in the segment and what we do to support those and I would say that the lumpiness or the pattern is probably even less -- something less that you would want to try and predict because of digital marketing and our ability to act very quickly and take advantage of opportunities and spend behind strength and quickly adapt.

So all this is part of a changing environment that we're in, and we're trying very hard to adapt in that environment and be very successful.

That will mean that we will be very quick and opportunistic with our spending.

And I don't think you can always point to a certain pattern with that.

So I know it's a long answer, but I would say it has a lot to do with the spending, and we took advantage of opportunities in the fourth quarter that we like, and we're trying to get a higher return on all of our spend and sometimes that will mean it will be in 1 period 1 year and a different period the next.

And Frank, last thing I'd say about this is please remember that in the fourth quarter of fiscal '18, we had some items that we were putting through, closed out channels in Houseware, so it moved things around even more.

We're not trying to confuse you and say well, therefore, you can never predict it.

It's frankly the reason why we give annual guidance because things do move around and then you take the seasonality, which does not especially affect Housewares the way it can in Health & Home.

But it makes it almost a impossible task to get down to the $0.01 by quarter or down to the $1 million by -- on the EPS side, or down to the $1 million on the revenue.

And as Brian said in his comments, we've become very dynamic.

The environment is digital, things move fast, consumers make their choices, our product launches others, and we would rather be able to respond as nimbly and quickly as we can to the marketplace and do what we think is right for the year, do what we think is right for the strategy and the long term even if it pushes things around within the quarters.

We'll take our next question from Chris Carey, Bank of America.

So just on Housewares, momentum continues here.

So what's the distribution runway on Hydro Flask?

So you talked about East Coast, right?

But if you just look at the country or indeed, the world, how far can this products really go as far as getting into new channels and just on top of that, what do you think about household penetration, right?

So how many SKUs are households buying today and where do you think that can go over time?

Yes, love it.

These are great questions.

So let's start with the distribution.

I think you know well the history of Hydro Flask it started out actually in Hawaii, believe it or not about a decade ago, spread quickly to the West Coast, and it's been making its way east over recent years.

Our efforts in the Midwest and Southwest went far during the last couple of years, and we've been working on the east.

As the brand got a lot of traction, the suction from the trade became big and between our push to build the East and a couple of really big customers who themselves leaned in and said we prefer and want this product across our chains, across the country and including in the East.

Things move very quickly over the last year.

We're not finished yet, so to your point about runway we believe that there's more and you can see it on the shelf that there's more items on the shelf.

There's more variety.

We're bringing new products, which also puts new items on the shelf.

And we're getting support from some big retailers, who want it that way.

So this is helping as well.

And you can see it in the consumption too.

I happen to spend a lot of time on the East Coast.

I've got kids of college age on the subway in cities like New York or Boston something like this, there's Hydro Flask popping out of every backpack of young people and I can just tell you 2 or 3 years ago, it just wasn't the case.

So it's just well loved as was said there, and you can see it in all the outdoor lifestyle kind of behaviors where you go to hike bike and sports and all that, you just see a lot, it's become an essential part and that's why we have kind of let's go positioning because if people want to take this with them like their cellphone and their wallet.

It's one of the things they'll carry in their hands.

In terms of the ability to build further distribution, it's not just the area that we're talking about, but we -- new products will help too.

So we're getting into some adjacent categories.

You heard us mention 3 or 4 on the call and some of those will be on the bottle.

So we think there's opportunities to get new distribution in the adjacencies that we have been launching into and we're supporting them with spending, and we like where we are so far.

In terms of going beyond the United States, we did mention international, and the international growth has been significant on Hydro Flask.

We don't break out the percentage on the business, but I can say when we bought Hydro Flask a few years ago that number was close to 0, and it's now a meaningful percentage of the total sales and the total sales have multiplied since we bought it.

So we like that aspect.

And in the case of distribution and now consumer marketing, this is also ramping up overseas.

We've done some pretty important market research studies.

We know where we're focusing, and we know what the insights are to make sure that we reach those consumers and develop those markets, so we're pouring effort into that to accelerate on the international side we like and especially in a few countries, where we'll be focusing.

For competitive reasons, it's hard to get into all the details on that stuff.

And then in terms of the household penetration, I strongly concur with your point that get into a lot of households and you ask where is the limit on this stuff and you may be worried about saturation.

We're seeing the opposite and if there's a basic marketing concept called just one more that is working in Hydro Flask and what's driving it is new shapes, colors, lids, you might have seen, we just came out with the new national park series.

They're extremely well received, people love national park.

There's almost like a slightly overzealous embrace of those parts around the country because people just value and cherish and to represent that on the bottles of people who feel that way like myself by the way, who then go and proudly support and live that lifestyle whether it's in the parks or not going.

And you think maybe it's not a big deal.

But it is, and for people, it's just one more.

I can tell you those same kids whether they're young kids in households or teenagers or the college kids that I was mentioning before there always seems to be yet another color, yet another shape, the sports cap, the one for the gym and that leads people to buy more of these and that just one more logic is defined the concept.

Well, everybody has got one so water is over, which is just not true.

And then last point I'd make is environmental one.

It's becoming very uncool to walk around with a single-use plastic water bottle just like straws became evil a year or so ago, the idea of walking around with a single-use plastic water bottle is seen by many people as an irresponsible and inappropriate behavior.

Why would you do that when there are so many good alternatives, so there's lots of reasons to continue to drive household penetration, whether it's just one more, whether it's environmental or us bringing out cool new stuff that people just want.

And you mentioned tangential categories, how is the cooler launch been going?

Yes.

It's way too early to know.

We just launched the spring '19 collection and there are some cool new cooler products.

There's also the new cooler cup, which is very cool.

It's a product that acts as a koozie as well as itself a cup, and it's versatility.

It just won that award that we mentioned in the prepared remarks.

And so I'd say, a good start.

We are up from basically 0 in coolers.

We hadn't done that much, just the tote and the backpack last year, and we're now bringing new versions and new varieties.

So we'll see how they turn out Chris, but the ideas is to get beyond the bottle and that's only upside for Hydro Flask.

Got it.

And then just on the M&A front, you continue to talk about use of capital and suggested that, that will continue to be something that you're going to be focusing on in the coming fiscal year.

Is there a reason, why you haven't executed a deal yet?

Is it a matter of fit?

You just really want to make sure that you're doing the right thing and if not, there's obviously no reason to put that capital to work?

Yes.

It's an important area, and it was true in the Phase I. It will be true in Phase II.

The only difference between Phase II versus Phase I is we'll be even more selective in Phase II to make sure that we're bringing the right stuff into Helen of Troy.

If there's a cute little tuck-in that's just right for us or a smaller upstart type of business where we think their skills plus our machine is a better together scenario, we might buy some smaller things.

But on the medium or larger ones, it's not about being so picky that we don't buy or there's something wrong in our process.

Frankly, we've looked at many.

Countless, frankly, in the last couple of years, so you say well, that's 3 years of saying no, you must be saying no, a lot, there was hair on the deals that we got far on and I think you and our shareholders would prefer that we don't buy something that looks good, uses the balance sheet, but nonetheless, creates nightmares for us from an ownership standpoint, and we end up in a difficult situation, where there's impairments, inability to grow, drags on our operations and our results, and that's not a responsible stewardship of capital.

Sometimes we just see the marketplace as well, take our stock for -- to the cleaners, and it demonstrates to us an opportunity to put the capital to work by eating our own cooking.

So we've done that from time to time as well.

And then in terms of prospects, frankly, there's a couple of good ones right know, and we'll see where they go but we're going to be very careful on the diligence front and there's some stuff out there that looks awfully shiny, right up until you open the hood, and then you get around there and stuff, a few leaks that we don't think are right or that the buyer might not acknowledge are there.

We're focused on M&A and people might be frustrated and say, good, then buy something, but something is not a good answer, frankly.

Buy something exceptional, that's what people should be asking us to do.

We'll take our next question from Linda Bolton-Weiser with D.A. Davidson.

So in terms of the potential sale of Personal Care, I mean, there's undoubtedly going to be some earnings dilution related to that.

Are you thinking you can absorb that into your guidance?

Or you're going to just kind of reduce guidance later?

And then related to that there will be a little bit of unabsorbed overhead related to shedding that business.

So do you intend to take some sort of special cost-reduction actions to mitigate that?

So yes, that's my first question.

Linda, it's Brian.

We -- yes, you're correct that there would be an impact from Personal Care upon divestiture, and we would adjust our guidance accordingly if and when that were to occur.

I think you've seen us be active in terms of share repurchases, which I would say fills in some of the EPS impact that might occur in the future.

And we've been taking significant cost reduction steps in Beauty as you've seen.

So I don't want to say we did it in advance because we didn't know definitively that we would be in a divestiture process, but I think we've taken a lot of steps already in terms of share repurchases and cost reduction in an effort to offset any EPS impact.

There will be stranded -- some stranded overhead that we simply won't be able to get out, but I would say it's not hugely meaningful at -- especially at a total company level, the amount that, that we'll end up absorbing, and we believe even if there is slight EPS dilution in the aggregates that the benefits to our growth rates and our ability to expand margins in the future will improve dramatically.

So we believe that it's worth it to consider this step because even though when the absolute there might be slight EPS decretion, our ability to grow and to continue to expand margins off of the continuing ops space will be much greater.

Okay.

And then can I just ask about the guidance for the next fiscal year.

In terms of the top line growth, I mean, Housewares, I believe, you guided to 4% to 6% growth.

That's -- I mean, that's pretty strong, considering that you had -- I think you had some shelf space gains in OXO in the past fiscal year and the Hydro Flask distribution gains.

I'm having a hard time just getting really comfortable with feeling that you can do that type of growth on top of such good growth that we've just seen given that maybe distribution gains have happened a lot already in both businesses.

And how would the Hydro Flask and OXO growth be like similar for the 2 businesses or would one be expected to grow faster in FY '20?

Yes.

Good question, Linda.

So we just gave the guidance, we do believe in it, and we think the 4% to 6% is correct.

We are proud to be able to do what you just said in terms of a challenge, which is we've been growing strongly.

We just put a terrific year on the books for Housewares as well as each of the 2 brands in it.

And to grow over that is no mean feat.

That said we just did it in Q4.

So it's not only possible, but it's happening.

So we like the momentum.

If you look at the building blocks in our forecast for the year, they're strong, and we've listed many of them in the prepared remarks.

The digital investment is significant.

The distribution and new product stuff that was talked about in the response to Chris' question about Hydro Flask is substantial.

And OXO is not only an absolute phenomenal, new product development machine, but that marketing pillar that we've been building is substantive in OXO, and it is increasingly getting spending behind it as it proves its ROI and demonstrates that it can win.

It started out with things like content and video and A+ pages on Amazon and this kind of thing.

It's gone well beyond this now and the engine has got room to add a few more cylinders.

If you look at OXO's distribution unlike Hydro Flask, OXO is widely distributed.

So there's going to be fewer distribution gains in the United States.

That said, outside of the United States that, that expansion that we've been touching on for Phase II and Bob was asking about earlier in the call is meaningful, and we are putting effort into international not just for Hydro Flask, but also for OXO.

OXO has an international business.

It is growing nicely, in fact, it's growing faster than in the U.S. but we'd like to make it bigger and still grow at a good rate.

So love smaller numbers, but not small.

And in terms of both brands, Hydro Flask will grow faster than OXO and yet OXO has a significant track record of growing somewhere between the mid- and the high single digits.

So it's no slouch, and yet Hydro Flask has been growing faster, and we expect that to continue for fiscal '20.

All of that's enough to put the 4% to 6% on top of a hell of a year in fiscal '19 and frankly, the last couple of years have also been good for those brands, so we like the momentum

That's helpful.

And then finally, we've heard about this really rainy weather and flooding in many parts of the country.

Does that have any impact at all on your humidifier sales or your's more heath-related rather than environment-related?

Yes, this -- Glenn's question came up because it's an opportunity to help in a couple ways.

One specifically, and then to your question I'm going a bit more broadly.

Specific to your question, as we don't think that rainy weather will sell more humidifiers, sometimes dehumidifiers become interesting, but frankly, it's not a big business for us.

And I think you might have mentioned that in one of your reports about the dehums.

Humidifiers for us, are seasonal, but more related to cold and flu.

Vicks has an outright leadership position by a large margin in pharmacy where -- that you're talking about things like cough, cold, congestion all that kind of stuff, and that's where it's seasonally exposed.

The Honeywell, humidifiers and to some extent, the Vicks ones tend to be more for the home environment so not when you're sick, and those tend to be driven more by dry skin, dry weather, plants, furniture to comforting your breathing passages, some people get bloody noses just from dry heat this kind of thing and that sells a lot of humidifiers.

Relative humidity levels between 40% and 60% are just kind of good for the human life form and a lot of houses are not at that humidity level, and so the humidifiers sell in that regard.

On the broader point, this idea that Health & Home is somehow driven by huge events, whether it's tornado, flood, fire, cold, flu, famine, pestilence, all this kind of stuff, it's really just a good, solid business that responds to the basic needs of people in each of our categories.

And then when there's some sort of event like a forest fire that comes close to a large populated area or the smoke blows into the major cities.

Where we've seen in places like China, the smog that finds its way everywhere that does tend to help.

If you seek super cold weather people get cold and they buy things like space heaters, and we are a big player in space heaters, so those things do help but the basic human needs is what drives those categories, and every now and then something spikes, whether it's cold, flu, or polar vortex or like the big weather you're talking about in the Southeast right now, it hails or something like this.

People pay attention, but it has to extend itself and prolong itself for it to become a big, big driver of the seasonality.

Other than that it just kind of pokes along and rides with the seasons, and we try to kick some butt in those categories, with the better marketing, better products, better branding.

And we'll take our final question from Steve Marotta with CL King & Associates.

Allow me my congrats as well on the fourth quarter.

I have a couple of questions, but I'll limit to one.

I'll take the rest off-line.

I know we're running late.

Just to put a finer point on it there was a mention that the pricing actions associated with tariffs are now in the rearview mirror and again, just to put a finer point on it.

On the previous conference call, you cited 1 or 2 customers that offered significant pushback and so much so that it affected their guidance for the entire fiscal year last year.

Can you speak specifically to that dynamic?

Yes.

So yes, largely resolved on the pricing action and in terms of the comments from the last call just for clarity, one customer and only 2 categories.

We work with tens and hundreds of customers and across like a dozen categories so you're talking about de minimis percentage.

The only reason we disclosed it at all last call was because it happened to affect the outlook for the fourth quarter and, frankly, we put a $5 million size on it.

We saw the market take a pretty big bite out of us.

Over $5 million on roughly a $400 million quarter or kind of a 1% number, we were stunned to be honest, and we said on the call and in our webcast remarks from the ICR conference just a couple of days later that we thought that, that was not only overblown but wrong and that the result was that we were pretty good shape.

And then you heard me say earlier that pricing just happens to have a little lumpiness as it gets executed, and we were at that stage.

The market somehow got the idea that we got into a big tussle with our biggest customers across the board or something and it just was never true, and we kept saying so.

In the case of the current status, one of the categories is resolved entirely with that customer and the other one is on its way, not fully done.

That's why we just said it's largely resolved, and we see some ways to get through even this one very small part that's left.

So we're not especially worried about it, and even if you did the math on it, you have to get pretty far to the right of the decimal point to find the impact.

And ladies and gentlemen, this concludes today's question-and-answer session.

I would like to turn it back to the speakers for any additional or closing remarks.

Yes, thank you, operator.

We appreciate your support, all of our investors and our analysts, and we're very proud of the quarter, the year, and all the progress on Phase I. I can assure you we are hard at work executing our plans that we believe will drive another successful year in fiscal '20 and for the beginning of Phase II.

We also look forward to sharing more detail on Phase II with you at our Investor Day on the May 21st in New York City, which is the same day that we will be ringing the NASDAQ opening bell to celebrate our 50th anniversary.

So with that, I'd say thank you very much and appreciate you being with us today.

Ladies and gentlemen, this concludes today's question-and-answer session -- excuse me, ladies and gentlemen, this concludes today's conference.

We appreciate your participation.