• Adds fast-growing, premium, and category-leading brand created for curly and wavy hair
• Tuck-in acquisition complements and enhances the Company’s prestige Beauty platform
• Expected to be immediately accretive to consolidated sales growth rate, gross profit margin, adjusted EBITDA margin⁽¹⁾, adjusted diluted EPS⁽²⁾, adjusted diluted EPS growth rate, and cash flow from operations
• Closely aligns with Helen of Troy culture and Environmental, Social, and Governance (“ESG”) philosophy

Helen of Troy Limited, designer, developer and worldwide marketer of consumer brand-name home, outdoor, health, wellness, and beauty products, announced that one of its subsidiaries has acquired Recipe Products Ltd. Founded in 2017, the company’s Curlsmith products are a category leader in the rapidly growing market for prestige haircare products for all types of curly and wavy hair. Curlsmith’s curl-loving range of conditioners, shampoos, and co-washes was created in partnership with expert trichologists and stylists specializing in healthy hair. Its formulas are purposefully designed for the unique joys and challenges of all types of curls and textured hair. The products are vegan friendly and cruelty free, and do not use sulfates, parabens, silicones, mineral oils, phthalates, or diethanolamine (DEA) in their formulation.

The total purchase consideration, net of cash acquired, was $150.0 million in cash, subject to certain customary closing adjustments. This implies a pre-synergy multiple of less than 10x estimated calendar year 2022 adjusted EBITDA¹, which compares favorably to Helen of Troy’s current Enterprise Value (EV)²/TTM adjusted EBITDA³ multiple of approximately 15.0x. Calendar year 2022 net sales revenue is expected to be $40 – $42 million. Curlsmith immediately becomes the most profitable brand in Helen of Troy’s portfolio, further augmenting Beauty segment’s adjusted operating margin, which is already the highest in the Company. The acquisition is expected to be immediately accretive to consolidated and Beauty segment measures such as sales growth rate, gross profit margin, and adjusted EBITDA margin⁴, as well as consolidated measures such as adjusted diluted EPS⁵, adjusted diluted EPS growth rate, and cash flow from operations. The Company will discuss the transaction during its fourth-quarter fiscal year 2022 earnings conference call, which will take place on April 27, 2022.

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Julien R. Mininberg, Chief Executive Officer, stated: “We believe Curlsmith is an excellent fit with Helen of Troy, both strategically and financially. This transaction advances Helen of Troy’s strategy to invest in businesses that can accelerate profitable growth in categories where we can add value and leverage our scalable operating platform. It aligns with a key Phase II M&A objective of tucking in early stage, fast growing, and disruptive innovators to complement our portfolio of Leadership Brands. Curlsmith expands our platform in prestige beauty to capitalize on the fast-growing textured hair market. Approximately 60% of U.S. consumers have curly or textured hair. Prestige textured haircare products are growing ten times faster than products for non-textured hair, and twice as fast as mass market textured hair products. Curlsmith is winning by empowering consumers with curly and textured hair to love the hair they have and simplify care. The business more than doubled in size between calendar years 2020 and 2021 and we expect it to continue to grow at a healthy double-digit rate. As our third transaction in Beauty so far in Phase II, Curlsmith will complement our Drybar, Revlon and HOT Tools brands by broadening our range of offerings to consumers and professionals across the good, better, and best segments and adding more prestige liquids to our portfolio. We see excellent upside potential for Curlsmith, and we expect to add significant value to it by capitalizing on our expertise in beauty and our shared services platform. In Beauty, we will be immediately adding capability through a much larger salesforce in brick and mortar and online, additional DTC capability, marketing, category development, appliance know how, and an international go-to-market footprint. Once we complete the necessary integration activities, we expect to add further value to the business and achieve meaningful synergies by leveraging Helen of Troy’s highly capable global sourcing, distribution, and back-office shared service capabilities.”

Michal Berski, Curlsmith Founder and CEO added: “Helen of Troy has a talent for spotting exceptional indie brands that do things differently, and turbo charging them. So, from the get-go we knew that Curlsmith would be a compelling strategic fit. As a market-leading textured haircare brand, Curlsmith both complements and brings a new dimension to their already enviable prestige haircare portfolio.”

Financo Raymond James acted as exclusive financial advisor to Curlsmith.

Source: Helen of Troy Limited