Thank you everyone for being here. Here with me up on the stage is Noel Geoffroy, Chief Operating Officer, and Brian Grass, Chief Financial Officer of Helen of Troy Limited. If you're not familiar with the company, they are a leading global consumer products company, offering creative products and solutions for customers through a diversified, excuse me, portfolio of well-recognized and widely trusted brands, including OXO, Hydro Flask, Osprey, and Vicks, among many others. Thank you.
Thank you. Thanks, everyone. Good afternoon. It's great to be here. I'm very honored to be the incoming CEO of Helen of Troy as of the beginning of our next fiscal year, which will start on March 1. I'm delighted to be here today with Brian Grass, our CFO, who we brought back from retirement not that many months ago, so he'll make a few remarks as well. I'd also like to thank and recognize Julien Mininberg, who is our outgoing CEO. He'll retire as of February 29 after a distinguished 10-year career as the CEO of Helen of Troy. Thank you, and congratulations to Julien. This is our Safe Harbor slide. You can find it on our website. But before we jump into the presentation, I just wanted to touch on earnings.
Many of you probably know that we announced earnings earlier this week. Very pleased to say that we outperformed the quarter in both net sales and Adjusted EPS. Our results to date, and as we look at our outlook, it really positions us to end the year within the ranges of our original full-year financial guidance on net sales, Adjusted EPS, free cash flow, and our end-of-year debt leverage. Brian will go into this in a little bit more detail, but I'm going to pivot and talk a little bit about our new strategic plan, Elevate for Growth. We just heard a little bit in the introduction about the brand portfolio. The brand portfolio is one of the things that attracted me to come to Helen of Troy.
We have a really phenomenal, diversified stable of leadership brands that you see on the screen here. They're leaders in multiple categories and in multiple geographies. Importantly, we believe these brands have an opportunity to grow with innovation, with increased marketing, and even adjacencies into attractive spaces, as we've proven we could do with many of these brands up until now. Our mission going forward is to unlock the full potential of this portfolio and our brands. For those of you who are new to the Helen of Troy story, this gives you, kind of the history of the company in one chart. It's a 55-year-old company, and this shows the sales since our founding back in 1968 through to our last completed fiscal year across three eras.
You have the legacy beauty-only era, which is where the company started. Then you've got the diversification era, where new businesses were acquired, businesses like OXO were acquired in that period of time. And then the last 10 years is the transformation era, where you see growth over this time, driven both by organic and several acquisitions. All of this really sets up the foundation for our next strategic era that we're calling Elevate for Growth, and I'll speak more about that shortly. Over the last 10 years, the company has evolved in terms of its operating model, and really moved from a place of being independent or autonomous business units to a more and more centralized organization. As we gear up for the Elevate for Growth era, we've chosen even an increased level of centralization.
We did that in this last fiscal year through Project Pegasus, and through that, we're doing is our business units are now 100% focused on the consumer, on our brands, and on marketing. We created a regional market organization for North America, in addition to the regional market organization we have for international, and that organization is focused on our markets and our sales and really leveraging growth opportunities with our, with our retail customers. Finally, we fully centralized our global shared services so that we bring that functional excellence to everything we do to enable the growth of the business. We expect that we'll see both efficiency and effectiveness from these changes, and we already have.
Now, before I go into the strategic plan, I want to highlight the foundation that we're building on, and that's our purpose, vision, and values. These are timeless, and they're foundational and bedrock to Helen of Troy, and they really represent the essence of the company. Our purpose fuels everything we do, elevating lives and moments that matter everywhere, every day.
Our vision is to really continue to curate and build a distinguished family of highly trusted brands that delight consumers in those moments that matter. And finally, our values are representative of what we believe and how we operate every single day. And again, this is all a part of the culture and the winning culture that has been at Helen of Troy and that we'll continue to build on into this next era.
So I'll transition now to talk about Elevate for Growth. We rolled this out in October at an Investor Day, so I encourage you, if you haven't had the opportunity to do so, you can go onto our investor website and get a really detailed look at the plans.
But the plan overall has ambitious yet achievable objectives, long-term targets, and a compelling set of where to play and how to win strategic choices that will follow going forward. This summarizes those choices, and I won't have time to go through all of them today. So again, if you go to our website, you can watch the webcast and get a deep dive on all of them from the team. But I'll highlight a few of them that I think are relevant here today.
So the first is, I'm really gonna talk about two choices together, and it's all about our portfolio and how we want to act, and shape and invest in a growth portfolio going forward, and then it's also focused on consumer obsession. So let's start with the portfolio. One of the choices that we made, recently and that will continue, with Elevate for Growth, is to roll out a new portfolio classification. We assess the portfolio using timeless criteria. We're looking at the brands that we think have the most growth potential, and also those brands that have a really strong financial profile.
So this assessment allowed us to bucket our brands into Invest to Grow brands, those that we think have the most growth potential and are most attractive to us financially, our Stronghold brands, those stable brands that we expect to just continue to grow, but not at the elevated rates, and then the Optimized brands.
And in those cases, we may choose to either look at divestiture, we could milk those brands, or we could improve the profile of the brands going forward. So this new portfolio approach allows us to focus our investment so that we really do allocate our resources, whether they're people resource, innovation resources, marketing resources, the time and attention of our sales force, against those opportunities where we think we've got the best potential to grow. We also have our Pegasus Fuel .
We have a restructuring program that we launched last year, and the bulk of the savings from that program will come in our fiscal 2025, and we intend to reinvest that back into the business. So we feel that the combination of the Pegasus Fuel and this portfolio classification really allows a double benefit.
You're going to invest more effectively, and you're also gonna invest more fuel into the business. The other piece of this that I'll touch on here is consumer obsessed. We want to be consumer obsessed in everything that we do, and that obsession will lead to sharper brands, it'll lead to more relevant marketing content, it'll lead to better marketing activation and a stronger innovation pipeline, all that will add to that growth benefit of the classification and the brand portfolio that I'm speaking about.
The next choice that I'll take you through is talking about winning with winning, win with winning customers. So as I mentioned, we created a North American regional market organization, which is essentially a North American sales organization, and we did that so that we had a sales team that could really look across the entire Helen of Troy portfolio and look for opportunities to do joint business planning, elevate our relationships with our top customers, and see the full portfolio, look for those growth opportunities of where we might be able to lean in and get more leverage with our customers.
Related to this, we really wanna be where our shoppers shop, and we did a rigorous analysis where we looked at all the categories where we play, we looked at all of the channels and customers across the top, and we identified white space opportunities. So this could include expanding distribution with more of our portfolio and customers where we already exist today. So if we're well distributed with one part of our portfolio, but not in the other, this becomes an opportunity to expand there. And it also offers an opportunity to look for new customers. So this, we believe, will be a really important part of our growth going forward beyond this year. We've already seen some success here. We've talked about getting our OXO SoftWorks line into Walmart, as an example.
We were before not in distribution in Walmart. We've also talked about getting our PUR brand into the dollar channel. So these are just a couple of examples that have already borne fruit for us in fiscal 2024. The next I'll talk about is strategically growing international. We, like we've done with our North America categories and customers, we've also taken a careful look at our brand market combinations internationally, and we prioritized again in those areas where we think we've got the right market attractiveness and a strong ability for us to win. This will again allow us to focus our resources in those highest potential opportunities, and then we've identified kind of the next tier up of where we would go next, so that we can really capture that low-hanging fruit quickly.
I also wanna mention that we'll continue to look to grow international through acquisition. Osprey is a great example of this. This was a brand that we acquired fairly recently, and over half the sales are international, and so it was a great way to give scale to our international business, and we'll continue to look for those opportunities. So then the last strategy I'll touch on today is continuing Better Together M&A.
As we talked in the history of the company, this is a company that has grown through terrific acquisitions. We built the outdoor vector with Osprey and Hydro Flask. We leaned into prestige beauty with Drybar and Curlsmith, and some of these are our best known and highest growth potential brands today. So we'll continue with this winning M&A approach as we go forward.
We think about it as, as employing the String of Pearls strategy, from an M&A standpoint, and we'll look for those, assets that we feel are better together, where both Helen of Troy is better because of the asset coming in, because of capability or growth opportunities that the acquisition brings, and likewise, where Helen of Troy can make the acquired asset better through our capabilities, scale, etc. So as I conclude my remarks, we, you know, we believe the Elevate for Growth strategy will enable us to get back on the, the right elements, to get back on the flywheel, turning in the right direction again.
I touched on some of them in what I talked about, our portfolio strategy, the incremental investment with Pegasus, the new organization changes that will drive our efficiency and effectiveness, and Brian will touch on a few more as he shares his remarks. And I'll turn it over to Brian.
Thank you, Noel. Good afternoon, everyone. Good to be here again. I'll start with Q3 results we announced yesterday. We were pleased to report third quarter results that exceeded our expectations. We achieved better-than-expected net sales, further strengthened gross margin, grew Adjusted EPS, and generated strong cash from operations that put us slightly ahead of our plan to deleverage for the year.
Net sales were down 1.6% compared to the same time last year, which includes an embedded decline we expected going into the year of approximately 3.4% from our SKU rationalization choices and the bankruptcy of Bed Bath & Beyond. Our Adjusted EBITDA margin was largely flat, despite lower operating leverage and higher annual incentive compensation and marketing expense compared to the same period last year.
Then finally, our Adjusted EPS of $2.79 exceeded expectations, even as we overcame a charge of approximately $0.05 related to the Rite Aid bankruptcy during the quarter. We're not satisfied with our recent year-over-year performance, but we are very pleased with our overall Phase Two results. Noel kind of took you through some of the phases of the company's evolution, and the last phase we're just completing is Phase Two, and we're about to get into the Elevate for Growth phase. Over the course of Phase Two, core business revenue, we're expecting it to end the phase at 6.6% compounded growth through a combination of organic and acquisition growth.
We've been able to achieve significant gross margin expansion in Phase Two, with the bulk of it coming from recent improvements, which we expect to dovetail into fiscal 2025. We expect EBITDA margin expansion despite, you know, recent significant macro headwinds in the environment and amping up our growth investment back into the business. And finally, Adjusted EPS core business CAGR of 4% through a period of what I would call extraordinary disruption. I'm pleased with our results to date, which position us to end the year within our full year outlook that we provided at the beginning of the year.
More specifically, the midpoint of our revised outlook for sales and EPS is essentially the same as what we provided at the beginning of the year, and we've been able to fully maintain our outlook for free cash flow and ending debt leverage. We see signs of stabilization and underlying strength in our business coming off of a difficult year last year. Starting on the left, we've begun to reestablish a track record of top and bottom-line growth in line with or bottom line performance in line with expectations in a volatile environment. Looking at the right-hand side, we're also improving underlying fundamentals with significant gross margin expansion and free cash flow growth. Our adjusted profit measures are back on track with our kind of history with high conversion ratios to cash, you see here on the slide.
Then turning to the Elevate for Growth plan, we estimate strong financial outcomes over the course of the plan, built with bottoms-up organic revenue by brand, acquisition and divestiture inputs, and required investment inputs. We considered multiple scenarios before selecting the one we believe is most representative of our potential outcome.
We modeled reasonable acquisition impacts for illustrative purposes and are illustrating with and without. And then we included Project Pegasus savings that Noel referred to, in line with our disclosures, and assumed $100 million of share repurchase annually. And then finally, we assume commodity and freight costs to remain largely at current levels, slight moderation of interest rates beginning in fiscal 2025, and more normalized inflationary impacts beyond fiscal 2025. O n the right-hand side, you can see the average annual organic targets we expect to result from those assumptions.
Net sales growth of 3%-4%, which excludes acquisitions, divestitures, and material foreign currency. Adjusted EBITDA margin expansion of 30-40 basis points per year. Adjusted EPS growth of 10% or greater each year, which excludes acquisitions, divestitures, and currency, but includes share repurchase.
Achievement of 18% return on invested capital by the end of fiscal 2030, and then reinvestment to earnings growth ratio of 2/3:1/3, compared to more of a 50/50 ratio that we employed in the past. And then we think this is enough to get our growth investment as a percentage of sales to 9% or greater of sales, where we kind of stand at 6% today. So that we expect that to have a flywheel effect on revenue that we really haven't modeled.
We kind of conservatively left the flywheel effect from the additional investment out of the plan, and so that should be upside to our plan. Here's how our targets line up against the targets in Phase One and Phase Two of the transformation, and I won't go through all of them in the interest of time, but in each case, we're elevating our targets in the next phase.
Turning to performance levers below the line, we think Project Pegasus, the restructuring plan we started in fiscal 2024, will create many advantages for years to come. Just as a reminder for those who, you know, haven't followed us closely, this consists of savings of $75 million-$85 million over a three-year period, which we intend to use to amplify our growth investment.
The bulk of this savings we're expecting in fiscal 2025, so our upcoming fiscal year. However, we intend to develop ongoing productivity initiatives that will supplement Pegasus savings in fiscal 2026 and later years. While Pegasus itself may end in fiscal 2026, our productivity initiatives will not.
We believe we have significant earnings growth drivers that can fuel next level growth investment and EPS accretion. I talked a lot about the investment at this point and not so much the EPS accretion, but we think we can do both. While we're not giving specific guidance for fiscal 2025 at this point, we do have an illustrative example to show. Let's walk through it. We expect Pegasus and ongoing productivity initiatives to be a significant driver, and that's illustrated in the blue bar here for fiscal 2025.
Next, we're expecting a margin benefit from a higher mix of Invest to Grow revenue, as Noel talked about. And then portfolio and SKU optimization will continue to lift profitability in fiscal 2025 and going forward. And then next is the favorable impact from our new state-of-the-art distribution facility and consolidation of our distribution network that we're in the process of working on.
And then finally, we have capital deployment accretion and tax structure leverage, which our tax structure gains efficiency as we grow, and so we continue to get more and more efficient with taxes as the plan will evolve. So absent any reinvestment, we believe we could drive 26% earnings growth in fiscal 2025, but we will plan to evaluate the ratio of earnings growth and reinvestment each year based on the opportunities we see.
On average, over the course of the plan, we expect to reinvest back into the business roughly two-thirds of that profit for brand building and new product development to feed the flywheel, but we're not gonna be dogmatic about it. We're gonna consider our opportunities as we start each and every year.
That leaves Adjusted EPS growth annually of at least 10% over the course of the plan. We think we can rinse and repeat each year of the Elevate for Growth plan and do it in a similar matter, similar manner, where you see we can generate. We believe we can generate up to 30% earnings growth and then have 20% of that back into the business and still achieve a 10% EPS outcome.
We think this is a lot of fuel to kind of bring the company to the next level. See here an illustration of what that would mean in terms of investment. We would go from approximately 6% of sales, where we sit today, to 9% of sales.
And you see there the investment ratio would kind of change from what we've typically done, which is drop 50% to the bottom line and put 50% back into the business. Now we wanna amp that up and put 60%, roughly two-thirds back into the business, and then drop 33% to the bottom line. We think that level of investment will help drive strong results in the Elevate for Growth era.
Just to get you grounded on the slide, all the presented metrics have the assumption of a divestiture in the first quarter of fiscal 2025. So that's our upcoming fiscal year. In that first quarter, we're illustrating a potential divestiture, and it's something that we're working on. Prior period, as reported results, were not adjusted in this presentation, as we don't have certainty that that will occur.
We also assume two acquisitions over the course of the plan, which are illustrated with the lighter color bars on the top of each chart. And then this illustration provides our vision for organic and inorganic growth. We believe we can achieve 3%-4% organic revenue growth over the course of the plan, with growth of 6.3%, including acquisition.
We think we can grow Adjusted EBITDA at a 5.5% organic CAGR or over 8% with acquisition. Then using all the earnings growth drivers that we have, that we just reviewed, we think we can drive 10% organic Adjusted EPS growth while making the incremental investment we discussed. Then with acquisition, we think we can drive EPS growth of 12.4%.
Then finally, we're targeting to get to an organic return on invested capital of 18%, and then 16% with acquisition. Here's the next level flywheel. I won't go through it in the interest of time, but in each case, we think we've elevated each element of the flywheel, and this is gonna provide the inertia that we think we can drive in the business going forward.
Here's what it looks like in terms of accretion from capital deployment. We expect to drive significant accretion while also de-levering our balance sheet. As an example, we could drive accretion of over $0.80 in fiscal 2025 just from share repurchase and debt paydown alone. Even with more extensive capital deployment, our model implies leverage at or below our target range by the end of fiscal 2025.
And then, as you can see there, we're below our target leverage ratio for many of the years of the plan, so any capital deployment above where we've projected would be upside to our model. And finally, we think we can use a combination of operating profit growth, tax efficiency, working capital improvement, and significant debt reduction to drive best-in-class return on invested capital.
And I'll close with what I think are the key investment highlights for you to consider. Trailing twelve-month trends in fiscal 2024 outlook signal we're at an inflection point in fundamentals and operating results. Project Pegasus provides next level reinvestment fuel, operating efficiency, and organizational capability. Key metrics and related cash conversion ratios indicate that Helen of Troy is undervalued related to peers. Recent strategic investments and initiatives provide a strong platform for growth.
Rapidly improving balance sheet provides capital deployment optionality that can drive significant accretion. And then multiple earnings growth drivers fuel next level investment and double-digit Adjusted EPS accretion. We have the opportunity to establish even better M&A capabilities. And finally, the Elevate for Growth plan has potential to produce strong financial results with upside from additional capital deployment. And that concludes our presentation for today. Thank you for joining us. Thank you.