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Acquisitions | 12 Months Ended
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Feb. 28, 2025
Business Combinations [Abstract] |
Acquisitions | Note 6 - Acquisitions Olive & June On December 16, 2024, we completed the acquisition of 100% of the membership interests of Olive & June, an innovative, omni-channel nail care brand. Olive & June products deliver a salon-quality experience at home and include nail polish, press-on nails, manicure and pedicure systems, grooming tools and nail care essentials. The acquisition of Olive & June complements and broadens our existing Beauty portfolio beyond the hair care category. The Olive & June brand and products were added to the Beauty & Wellness segment. The total purchase consideration consists of initial cash consideration of $229.4 million, net of cash acquired, which included a preliminary net working capital adjustment of $5.3 million, and is subject to certain customary closing adjustments, and contingent cash consideration of up to $15.0 million subject to Olive & June's performance during calendar years 2025, 2026, and 2027, payable annually. The acquisition was funded with cash on hand and borrowings under our existing revolving credit facility. We incurred pre-tax acquisition-related expenses of $3.0 million during fiscal 2025, which were recognized in SG&A within our consolidated statement of income. The contingent cash consideration of up to $15.0 million is payable annually in three equal installments subject to Olive & June achieving certain annual adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) targets during calendar years 2025, 2026 and 2027. If the annual adjusted EBITDA target is not met, no payment is required. As of the acquisition date, we recorded a liability for the estimated fair value of the contingent consideration of $4.1 million, of which $1.8 million and $2.3 million was included within accrued expenses and other current liabilities and other liabilities, non-current, respectively, in our consolidated balance sheet. This contingent consideration liability will be remeasured at fair value each reporting period until the contingency is resolved, with changes in fair value recognized in SG&A. See Note 14 for additional information regarding the estimated fair value of our contingent consideration liability. We accounted for the acquisition as a purchase of a business and recorded the excess of the purchase price over the provisionally determined estimated fair value of the assets acquired and liabilities assumed as goodwill. Adjustments to these provisional amounts may be made during the measurement period as we continue to obtain and evaluate information necessary to finalize these amounts. The goodwill recognized is attributable primarily to expected synergies including leveraging our operational scale, existing customer relationships and distribution capabilities. The goodwill is expected to be deductible for income tax purposes. We have provisionally determined the appropriate fair values of the acquired intangible assets and completed our analysis of the economic lives of the assets acquired. We assigned $51.0 million to trade names and are amortizing over a 15 year expected life. We assigned $8.0 million to customer relationships and are amortizing over a 8.5 year expected life, based on historical attrition rates. We assigned $1.6 million to non-compete agreements and are amortizing over a 5 year expected life. The following table presents the preliminary estimated fair values of assets acquired and liabilities assumed at the acquisition date:
(in thousands) |
Assets: |
Receivables | $ | 13,059 |
Inventory | 16,021 |
Prepaid expenses and other current assets | 4,798 |
Property and equipment | 1,490 |
Goodwill | 154,839 |
Trade names - definite | 51,000 |
Customer relationships - definite | 8,000 |
Other intangible assets - definite | 1,600 |
Other assets | 275 |
Total assets | 251,082 |
Liabilities: |
Accounts payable | 6,514 |
Accrued expenses and other current liabilities | 12,840 |
Other liabilities, non-current | 2,300 |
Total liabilities | 21,654 |
Net assets recorded | $ | 229,428 |
The impact of the acquisition of Olive & June on our consolidated statement of income for fiscal 2025 is as follows:
December 16, 2024 (acquisition date) through February 28, 2025 (in thousands, except earnings per share data) | Fiscal Year Ended February 28, 2025 (1)
Sales revenue, net | $ | 23,010 |
Net loss | (1,755) |
EPS: |
Basic | $ | (0.08) |
Diluted | (0.08) |
(1)Represents approximately eleven weeks of operating results from Olive & June, acquired December 16, 2024. Net loss and EPS amounts include acquisition-related expenses, share-based compensation expense, amortization expense, interest expense and income tax expense. The following supplemental unaudited pro forma information presents our financial results as if the acquisition of Olive & June had occurred on March 1, 2023. This supplemental pro forma information has been prepared for comparative purposes and does not necessarily indicate what may have occurred if the acquisition had been completed on March 1, 2023, and this information is not intended to be indicative of future results:
| Fiscal Years Ended the Last Day of February,
(in thousands, except earnings per share data) | 2025 (1) |  | 2024
Sales revenue, net | $ | 1,980,423 |  |  | $ | 2,080,566 |
Net income | 123,883 |  |  | 176,893 |
EPS: |  |  |
Basic | $ | 5.38 |  |  | $ | 7.41 |
Diluted | 5.37 |  |  | 7.38 |
(1)Pro forma net income and EPS amounts for fiscal 2025 include acquisition-related expenses incurred by Olive & June and the Company of $8.9 million and $3.0 million, respectively, amortization expense of $4.7 million, and interest expense of $2.4 million. These amounts have been calculated after adjusting the results of Olive & June to reflect the effect of income taxes and amortization expense for definite-lived intangible assets recognized as part of the business combination as if the acquisition had occurred on March 1, 2023. Curlsmith On April 22, 2022, we completed the acquisition of Recipe Products Ltd., a producer of innovative prestige hair care products for all types of curly and wavy hair under the Curlsmith brand. Curlsmith's products are a category leader in the prestige market for curly hair and include conditioners, shampoos and co-washes purposefully designed for the unique joys and challenges of all types of curls and textured hair. The Curlsmith brand and products were added to the Beauty & Wellness segment. The total purchase consideration was $147.9 million in cash, net of a final net working capital adjustment of $2.1 million and cash acquired. The acquisition was funded with cash on hand and borrowings under our existing revolving credit facility. We incurred pre-tax acquisition-related expenses of $2.7 million during fiscal 2023, which were recognized in SG&A within our consolidated statement of income. We accounted for the acquisition as a purchase of a business and recorded the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed as goodwill. The goodwill recognized is attributable primarily to expected synergies including leveraging our Beauty & Wellness segment's existing marketing and sales structure, as well as our global sourcing, distribution, shared services, and international go-to-market capabilities. The goodwill is not expected to be deductible for income tax purposes. During fiscal 2023, we made adjustments to provisional asset and liability balances, which resulted in a corresponding net increase to goodwill of $0.1 million. We also finalized the net working capital adjustment during fiscal 2023, which resulted in a $1.8 million reduction to the total purchase consideration and goodwill. During the first quarter of fiscal 2024, we made final adjustments to provisional liability balances, which resulted in a corresponding increase to goodwill of $0.3 million. The following table presents the estimated fair values of assets acquired and liabilities assumed at the acquisition date:
(in thousands) |
Assets: |
Receivables | $ | 4,211 |
Inventory | 7,890 |
Prepaid expenses and other current assets | 119 |
Property and equipment | 212 |
Goodwill | 117,108 |
Trade names - definite | 21,000 |
Customer relationships - definite | 12,000 |
Deferred tax assets, net | 360 |
Total assets | 162,900 |
Liabilities: |
Accounts payable | 1,401 |
Accrued expenses and other current liabilities | 2,813 |
Income taxes payable | 2,572 |
Deferred tax liabilities, net | 8,187 |
Total liabilities | 14,973 |
Net assets recorded | $ | 147,927 |
The impact of the acquisition of Curlsmith on our consolidated statement of income for fiscal 2023 was as follows:
April 22, 2022 (acquisition date) through February 28, 2023 (in thousands, except earnings per share data) | Fiscal Year Ended February 28, 2023 (1)
Sales revenue, net | $ | 35,530 |
Net income | 2,906 |
EPS: |
Basic | $ | 0.12 |
Diluted | 0.12 |
(1)Represents approximately forty-five weeks of operating results from Curlsmith, acquired April 22, 2022. Net income and EPS amounts include allocations for corporate expenses, interest expense and income tax expense. The following supplemental unaudited pro forma information presents our financial results as if the acquisition of Curlsmith had occurred on March 1, 2021. This supplemental pro forma information has been prepared for comparative purposes and does not necessarily indicate what may have occurred if the acquisition had been completed on March 1, 2021, and this information is not intended to be indicative of future results:
(in thousands, except earnings per share data) | Fiscal Year Ended February 28, 2023 |  |
Sales revenue, net | $ | 2,079,759 |  |  |
Net income | 145,186 |  |  |
EPS: |  |  |
Basic | $ | 6.06 |  |  |
Diluted | 6.03 |  |  |
These amounts have been calculated after applying our accounting policies and adjusting the results of Curlsmith to reflect the effect of definite-lived intangible assets recognized as part of the business combination on amortization expense as if the acquisition had occurred on March 1, 2021. Osprey On December 29, 2021, we completed the acquisition of Osprey, a longtime U.S. leader in technical and everyday packs. During fiscal 2023, we finalized the net working capital adjustment, which resulted in a $1.6 million reduction to the total purchase consideration and goodwill. The total purchase consideration, net of cash acquired, was $409.3 million in cash, including the impact of the final net working capital adjustment. We incurred pre-tax acquisition-related expenses of $0.1 million during fiscal 2023 which were recognized in SG&A within our consolidated statement of income.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 805 -SubTopic 20 -Name Accounting Standards Codification -Section 50 -Paragraph 5 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479907/805-20-50-5 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/805/tableOfContent + Details
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