NYSE:PBH Prestige Consumer Healthcare Q1 2024 Earnings Report $81.25 +0.22 (+0.27%) Closing price 05/7/2025 03:59 PM EasternExtended Trading$79.06 -2.19 (-2.69%) As of 08:00 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Prestige Consumer Healthcare EPS ResultsActual EPS$1.06Consensus EPS $1.01Beat/MissBeat by +$0.05One Year Ago EPS$1.09Prestige Consumer Healthcare Revenue ResultsActual Revenue$279.31 millionExpected Revenue$278.79 millionBeat/MissBeat by +$520.00 thousandYoY Revenue Growth+0.80%Prestige Consumer Healthcare Announcement DetailsQuarterQ1 2024Date8/3/2023TimeBefore Market OpensConference Call DateThursday, August 3, 2023Conference Call Time8:30AM ETUpcoming EarningsPrestige Consumer Healthcare's Q4 2025 earnings is scheduled for Thursday, May 8, 2025, with a conference call scheduled at 8:30 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Prestige Consumer Healthcare Q1 2024 Earnings Call TranscriptProvided by QuartrAugust 3, 2023 ShareLink copied to clipboard.There are 9 speakers on the call. Operator00:00:02Welcome to the Q1 2024 Prestige Consumer Healthcare, Inc. Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Phil Terpoli, VP of Investor Relations and Treasury. Operator00:00:41Please go ahead. Speaker 100:00:49Thanks, operator, and thank you to everyone who has joined today. On the call with me are Ron Lombardi, our Chairman, President and CEO and Christine Sacco, our CFO. On today's call, we'll review our Q1 fiscal 2024 results, discuss our full year outlook and then take questions from analysts. A slide presentation that accompanies today's call can be accessed by visiting prestigeconsumerhealthcare.com, clicking on the Investors link and then on today's webcast and presentation. Please remember some of the information contained in this presentation today includes non GAAP financial measures. Speaker 100:01:21Reconciliations to the nearest GAAP financial measures are included in our earnings release and our slide presentation. On today's call, management will make forward looking statements around risks and uncertainties, which are detailed in a complete Safe Harbor disclosure on Page 2 of the slide presentation that accompanies the call. These are important to review and contemplate. Business environment uncertainty remains heightened due to supply chain constraints and high inflation, which have numerous potential impacts. This means results could change at any time and the forecasted impact of risk considerations is the best estimate based on the information available as of today's date. Speaker 100:01:57Additional information concerning risk factors and cautionary statements are available in our most recent SEC filings and most recent company 10 ks. I'll now hand it over to our CEO, Ron Lombardi. Ron? Speaker 200:02:09Thanks, Seth. Let's begin on Slide 5. We are pleased with our start to the year as Q1 delivered solid results, thanks to our leading brands with continued momentum across our portfolio. We achieved net sales of $279,000,000 in Q1, slightly ahead of what we anticipated back in May. This performance continues to benefit from our broad portfolio and long term brand building efforts. Speaker 200:02:37These attributes drove solid 1.8 percent organic sales growth, including continued strong performance from Dramamine that I'll touch on in more detail shortly. These sales translated into solid profitability as we continue to operate with a strong EBITDA margin profile, generating robust earnings and free cash flow. We also experienced sequential improvement in gross margin, thanks to our pricing actions and cost saving measures that are effective against cost inflation. This stable financial profile enabled us to deploy capital efficiently. In the Q1, we completed our $25,000,000 share repurchase program, while still reducing leverage to 3.2x, thanks to our continued emphasis on debt reduction. Speaker 200:03:28Now let's turn to Page 6 to highlight the success of Dramamine in more detail. In Q1, Dramamine experienced solid double digit revenue growth, building on a long history of success that is driven by our time tested Brand building efforts. We do this by leveraging consumer insights where we look to meet ever evolving healthcare needs and find opportunities to grow the brand. Just like all of our key brands, Dramamine's objective of using numerous brand building tactics Consumer insights, the ability to grow the brand into adjacent categories over time and numerous marketing strategies that are time tested. For example, in the early days of our brand ownership, we expanded with new forms and flavors, launching highly successful less drowsy, non drowsy and great flavored offerings to help match consumers' needs. Speaker 200:04:37More recently, We developed our insight work even further and began addressing the distinctive nausea market with new Dramamine Nausea offerings, quickly becoming the number one brand in the category. These expansive items were successful, thanks to the underpinning of our long term brand building focus. For Dramamine, this has included highly recognizable marketing campaigns that engaged with consumers, reminding them of the benefits of the brand to treat motion sickness and nausea incidences whenever they arise. Shown in the lower right, this year our Ditch the Drama campaign features a memorable drama llama that only Dramamine can solve for. The results are clear. Speaker 200:05:24We've grown takeaways of the category and our brand, achieving a 12% compounded annual growth rate since fiscal 2019 around the time of the 2018 campaign shown here. This proven strategy is a playbook we use Across all of our brands to help expand our leading share and grow with retailers. Now let's turn to Slide 7 for an update on NYX. Our NYX brand is another example of brand building. NYX head lice treatments have gradually expanded their offering with consumers over time, which has helped deepen their connection with caretakers. Speaker 200:06:04Our insight work uncovered that consumers were looking for offerings not only for the treatment of lice, but for products that help ensure their removal and prevention of future occurrences. From this, we set to work developing new products to meet the needs of the consumer. Today, NYX offers a spectrum of head lice Products that most recently includes the efficacious NICS Treat and Prevent Kit that is off to a great start. As with Dramamine, these mix offerings are supported through effective marketing that set the brand up well to capitalize in category incident As headlight season is gradually returning to more normalized pre COVID levels, the brand is achieving sales well above the category In Q1, and as shown at the right, has expanded its leading number one market position in head lice to well above pre COVID share levels. So in summary, both Dramamine and Nix are timely examples of our brand building that we continue to execute across our portfolio to drive financial results. Speaker 200:07:15Now I'll pass it to Chris to walk through the financials. Speaker 300:07:18Thanks, Ron. Good morning, everyone. Let's turn to Slide 9 and review our Q1 fiscal 24 financial results. As a reminder, the information in today's presentation includes certain non GAAP information that reconciled to the closest GAAP measure in our earnings release. Q1 revenue of $279,300,000 increased 80 basis points versus the prior year and increased 180 basis points excluding the effects of foreign currency. Speaker 300:07:45As expected, EBITDA and EPS both declined slightly in Q1 from the prior year, but EBITDA margin remained consistent with our long term expectations. Let's turn to Slide 10 for more detail around consolidated results. As I just highlighted, our Q1 fiscal 2024 revenues increased 1.8% organically versus the prior year. By segment, excluding FX, North America segment revenues increased 1.8% and international segment increased 1 point 6% versus the prior year. The largest category growth drivers in Q1 were GI and Skin Care, including solid performance from Dramamine, which Ron discussed earlier. Speaker 300:08:27We also continue to experience year over year growth in the e commerce channel, Continuing the long term trend of higher online purchasing. Total company gross margin of 55.4% in the first quarter increased Sequentially, but declined 240 basis points versus last year's difficult comparison. This gross margin was as we expected and attributable to cost increases, partially offset by pricing actions and cost savings across our portfolio, which offset the dollar amount of inflationary cost headwinds. For the full year, we continue to anticipate gross margin flat to up slightly versus fiscal 2023 with Q2 estimated to be similar to Q1. As a percent of sales, advertising and marketing came in at 13% for the 1st fiscal quarter. Speaker 300:09:16For fiscal 2024, We still anticipate an A and M rate of just over 13% of sales and up in dollars versus the prior year. G and A expenses were 9.9 percent of sales in Q1 due to the timing of certain expenses. We still anticipate full year G and A dollars to decline slightly versus the prior year. Finally, diluted EPS of $1.06 compared to $1.09 in the prior year, down from the impact of cost increases and higher interest rates. For the remainder of fiscal 2024, we anticipate a Q2 interest expense similar to Q1, followed by lower interest expense in the second half. Speaker 300:09:56Finally, our Q1 tax rate of 22.5% was affected by the timing of certain discrete tax We anticipate a tax rate of approximately 24% for the remaining quarters of fiscal 2024. Now let's turn to Slide 11 and discuss cash flow. In Q1, we generated $46,600,000 in free cash flow, down versus the prior year due to the timing of working capital. We continue to maintain industry leading free cash flow and are maintaining our outlook for the full year. At June 30, our net debt was approximately $1,300,000,000 $1,000,000,000 of which is fixed, and we achieved a covenant defined leverage ratio of 3.2 times. Speaker 300:10:39We still anticipate being below 3 times leverage by fiscal year end. Lastly, in the quarter, we repurchased approximately 425,000 shares for $25,000,000 Completing the previously authorized share repurchase program. With that, I'll turn it back to Ron. Speaker 200:10:56Thanks, Chris. Let's turn to Slide 13 to wrap up. Our business continues to have solid momentum and our fiscal year is off to a good start. We are reaffirming our full year outlook, thanks to our diverse and leading consumer healthcare portfolio. For fiscal 2024, we continue to anticipate revenue of 1,000,000,001 $35,000,000,000 to $1,140,000,000 and organic revenue growth of approximately 1% to 2% versus fiscal 2023 Or organic revenue growth of 2% to 3% after excluding the planned strategic exit of non core private label business that we discussed on our May earnings call. Speaker 200:11:38For Q2, we anticipate revenue of approximately $285,000,000 down slightly from the prior year due largely to continued currency headwinds and the exit of private label. For EPS, we continue to anticipate diluted EPS of $4.27 to $4.32 for the full year. For Q2, we anticipate EPS of $1.07 up high single digits versus the prior year due to the timing of marketing spend. Lastly, we continue to anticipate free cash flow of $240,000,000 or more. We still expect being below 3.0x leverage by fiscal year end as we continue to execute our disciplined capital deployment strategy. Speaker 200:12:26With that, I'll open it up for questions. Operator? Operator00:12:34Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1,000,000 on your telephone and wait for your name to be announced. Our first question comes from the line of Susan Anderson with Canaccord Genuity. Please proceed with your question. Speaker 400:13:13Hi, good morning. Nice job on the quarter. I was wondering if you could talk about the dynamic between units and pricing and if you expect to take more price throughout the year. And then also are you finally starting to see costs normalize with the chance for that to flow through the margins later in the year? Speaker 300:13:30Hey, good morning, Susan. This is Chris. So we talked about giving our full year fiscal 'twenty four guide contemplating about a point of growth from price and a point from volume. For Q1, the majority of the growth was price. Volume was essentially flat. Speaker 300:13:45The majority of the pricing was executed last year. So the benefit of the price will gradually reduce as the year progresses. In terms of inflation, it's coming in largely as expected, right? If you think about Our inflation is largely wage inflation, going to be pretty consistent. So we're beginning to see some relief on certain costs sequentially such as freight. Speaker 300:14:05It does take some time for that to work through the P and L. And as a reminder, we talk about freight being in the low to mid single digits for us. So Probably not going to have as big of an impact as you might hear from some others. So we're expecting inflation for the year to come in largely as expected and gross margin obviously to follow. Speaker 400:14:24Okay, great. And then maybe if I could ask just about Hydralyte and the international business in the quarter. I guess, was that Weaker than expected or just really the FX impact it can overcome? And then also how should we think about that growth going forward? Speaker 200:14:39Good morning, Susan. Ron here. So the international business excluding FX was up slightly, largely as anticipated For the year, again, our outlook for international growth for the full year is returning back to kind of historic levels of mid single digits. And we continue to feel that the business is in line to deliver that for the year. Speaker 400:15:03Okay, great. And then if I could add one last one just on inventory levels at retail. I guess, do you guys feel like they're kind of back to normal or are there still categories that Could maybe benefit from restocking? Speaker 200:15:20So for the most part, Susan, The inventory level at retail of our products has been pretty consistent over the last handful of quarters as the supply chain caught up last year. So No meaningful area of benefit for restocking this year, and the level seems to be pretty consistent. Again, it's something that we monitor On a weekly basis here. Speaker 400:15:45Okay, great. Thanks so much. Good luck the rest of the year. Speaker 200:15:48Thank you, Susan. Operator00:15:50One moment for our next question. Our next question comes from Rupesh Patik from Oppenheimer and Co. Please proceed with your question. Speaker 500:16:07Good morning. Thanks for taking my question and congrats on the quarter. So just on women's health, if you can just update us in terms of you think about that category for the balance of the year? Speaker 200:16:17Good morning, Mukesh. So I think as we stated back in May, we're Anticipating that our women's health business will begin to stabilize and get back in a position for long term growth. During the quarter, we continued to see year over year decline for the women's health, largely due to a continuing Slow down in the category. Both of our brands, Monistat and Summer's Eve continue to have a significant number one share in those Categories and are providing leadership with new product launches planned for later this year and when they hit retail, we'll talk about them more. But We continue to feel good about the positioning of those businesses for longer term growth. Speaker 500:17:04Great. And then in The cough and cold category, I know incidence levels were down this past quarter, but your sales held up pretty well. So just curious, I guess, how is cough and cold inventory now in the channel? Just any thoughts on that category for the balance of your year as well? Speaker 300:17:19Yes. Hey, Rupesh, this is Chris. So Q1 for cough, cold was really reflective of what we thought we issued a Back in May, we're expecting more normalized trends this year in terms of seasonality from the retailers around cough, cold, And we're also expecting incidences to be down from the peak levels last year and we've seen some of that already in the Southern Hemisphere. So The benefit we have this year, as you kind of alluded to, is that our continuous improvements in our supply chain will serve to fill a bit of pipe at the retailer level. But as a reminder, coughcold is not a meaningful driver of our business in the mid to high single digits as a percent of our top line. Speaker 500:17:59Okay, great. And then maybe just one final question. As you look at your different channels, are you seeing any channel shifts or anything of note? And then just relate to I know one There's some speculation that one of the pharmacy chains could be in trouble and may have to file for bankruptcy. Just any thoughts in terms of any risk that you see out there from inventory stocking based on your visibility? Speaker 200:18:18Yes. So I guess a few questions there. First of all, in terms of channel shift, and I think we've touched on this in past quarters, We've begun to see some movement in shoppers as they look for maybe different price value propositions. The benefit for us with a broadly distributed across all channels product offering is We catch up with the consumer no matter where they choose to shop. We want all of our retail partners to be successful. Speaker 200:18:49So We kind of just stand back and see where they go and catch them where they end up is the first part. In terms of the drug retailer you're alluding to, it's been on our radar screen for a while. It is not a significant customer For us, so it's something that we'll continue to monitor, but at this point, we wouldn't anticipate it having any meaningful impact on our business Or result in any kind of change in inventory at retail for us. Speaker 500:19:24Great. Thank you. I'll pass it along. Operator00:19:28One moment for our next question. Our next question comes from Jon Andersen with William Blair. Please proceed with your question. Speaker 600:19:46Thanks. Good morning, everybody. Hey, John. I guess, just start out with a question around sales. The business was up About 1%, a little less than 1% in the Q1, on what looks like To be one of the easier comps for the year. Speaker 600:20:10And just wondering, It sounds like the revenue growth met your expectations, but I think it also implies perhaps some acceleration As you move through the balance of the year and are we thinking about that the right way to kind of hit the 1% to 2% And guidance for the year and from what are you planning or seeing from a I don't know if it's innovation or marketing perspective or both That might drive some modest acceleration from here. Speaker 200:20:45Yes. Good morning, John. Speaker 300:20:45This is Chris. So you're right. We were up just under a point for the quarter. Remember, FX contributed a point of headwind in the Q1, so Almost 2% in the Q1 on an organic basis. What gives us confidence for the most part, we're not seeing anything different than what we communicated back in May. Speaker 300:21:03We're going to have Some FX headwinds in the first half, it will continue into Q2 and then we'll see a slight tailwind in the back half. Looking at fiscal 2024 from an absolute dollar basis, the numbers are more comparable. Sequentially, we're expecting less fluctuation in fiscal 2024 quarter to Quarter than in the prior year. So it's really the FX piece and the comps that when you look at the growth rates for this year. Speaker 600:21:30Okay. That's helpful. And then gross margin, as you mentioned, improved sequentially, which was good to see. Are we going should we expect to see steady sequential improvement going forward? Was Was the sequential improvement, I guess, in the quarter is what I'm asking. Speaker 600:21:50Was it more kind of seasonal or mix driven? Or is there something more Permanent going on here with pricing catching up with commodities, other cost productivity flowing through that could lead A string of sequential gross margin improvements during coming quarters. Speaker 300:22:10Yes. Hey, John. So Q1, Largely as expected, you're right. The upside was primarily mix in North America and to some extent the flow of cost savings. Remember in the Q1, Usually our highest gross margin of the year as we're selling through product that was purchased in the prior year. Speaker 300:22:28So as we look to The outer quarters, I'm expecting a pretty consistent sequencing from off of Q1. We talked about Q2 being similar to Q1. So that will be the impact of the new inflation for this year being offset to your point by cost saving efforts that we put into place. So we're expecting gross margin to be pretty consistent throughout the rest of this year. Speaker 600:22:50Okay. And then you talked quite a bit about Dramamine already And when you called out kind of the GI category strength, skin care, I think was another area You mentioned dermatologics strength. Were you referring to nicks there? I'm just trying to understand what's maybe driving some of the strength in that category or platform? Speaker 200:23:14Good morning, John. Skin benefited from good performance both in NYX and Compound W during the quarter. Speaker 600:23:24Okay. And then last, the leverage ratio has come down quite a bit, continues to come down, even with The share repo as you mentioned. If you reach 3 or sub-three by the end of the fiscal year, What how are your kind of thoughts around priorities on use of excess free cash evolving As the ratio comes down to what it pretty low levels historically for Prestige. Speaker 200:24:02Yes. So going forward, John, I don't see us changing our capital allocation Priority even when we get below 3 and even if we end up quite a bit below 3, where we'll look to 1st and foremost continue to invest In brand building and in our business, and then continuing to reduce debt, building M and A Capacity and continuing to be thoughtful and disciplined around future opportunities. Speaker 600:24:35Great. Thanks so much. Speaker 200:24:37Thank you, John. Operator00:24:40One moment for our next question. Our next question comes from the line of Mitchell Panaro with Certovant and Co. Please proceed with your question. Speaker 700:24:57Yes. Hey, good morning. Most of my questions were asked and answered, But I did hit one on advertising and marketing. So it would be advertising and marketing was down Year over year due to timing. And I'm just curious where your focus is on advertising and marketing. Speaker 700:25:23Is there any change to your focus in channel or product mix this year versus last year? Speaker 200:25:32Good morning, Mitch. So, our approach is really to Move our advertising and marketing resources and investments to where the opportunity is. So every year, we put together a plan based on opportunities, new product launches and what's going on and then evaluate and Change as needed. So, we continue to get behind Dramamine in a big way. We've got a lot of success there, Some new products that are doing well same with Nick. Speaker 200:26:05So, no real change in the approach in terms of investing where the opportunity or new products are. Speaker 700:26:14And channel, I mean, I'm not sure is this is Where is your advertising spend focused meaning are we talking With in store circulars, are we talking media, other media? Where is it Today, has it changed at all from prior years? Speaker 200:26:41Yes. Over the last couple of years, it's been Fairly consistent and again it's the mix is different brand by brand, but TV, digital, search, Investments in the dotcomsearchinparticular, right? We had another great quarter with our dotcom and Amazon Business Grew over double digits during the quarter, I think, and we're up to 11% of 11% or 12% of total revenue for the quarter. So again, we're pulsing the investment where we're getting growth and where the opportunity is. So no real change. Speaker 700:27:21Okay. That's all I have. Thank you very much. Speaker 200:27:24Thank you, Operator00:27:50Our next question comes from Anthony Lebiedzinski from Sidoti and Company. Please proceed with your question. Speaker 800:28:00Hello. This is Stephane Guillaume on for Anthony Lebiedzinski. How are you guys doing? Speaker 200:28:07Good. Good morning. Thank you. Speaker 800:28:10My first question is, have you seen any notable changes from private label competition? Speaker 300:28:18Yes. Hey, good morning. So, no, we haven't seen any meaningful changes on private label. Over the long term, we look back even to pre COVID levels. Generally speaking, the majority of our categories we've been gaining share over private label. Speaker 300:28:33We found that consumers go to the trusted brands in these categories that held true throughout COVID and seems to be holding true Today, we saw it back when the financial crisis happened. So over a long period of time, we've been able to hold or gain share over private label. Speaker 800:28:51Thank you. And given your solid free cash flow, do you have an appetite for additional share buybacks? Speaker 300:29:00Yes. So the share buyback program essentially serves to offset dilution. We'll continue obviously to look at it as we always do. But as Ron mentioned, right now, our cash flow priorities are to invest in the brands we have, continue to pay down debt and we'll continue to be mindful in the space in terms of M and A. Speaker 800:29:22Thank you for taking my questions. Thank Operator00:29:30you. I'm showing no further questions at this time. I would now like to turn the conference back to Ron Lombardi for closing remarks. Speaker 200:29:38Thank you, operator, and I'd like to thank everybody for joining us this morning and I look forward to updating you on our business next quarter. Have a great day. Operator00:29:48Thank you for your participation in today's conference. This does conclude the program. You may nowRead morePowered by Conference Call Audio Live Call not available Earnings Conference CallPrestige Consumer Healthcare Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Prestige Consumer Healthcare Earnings HeadlinesUPDATED: Prestige Consumer Healthcare Inc. Reports Record Fiscal 2025 Revenue and EarningsMay 8 at 7:09 AM | globenewswire.comPrestige Consumer Healthcare Inc. Reports Record Fiscal 2025 Revenue and EarningsMay 8 at 6:00 AM | globenewswire.comAll Signs Point To Collapse - 401(k)s/IRAs /Are DoomedRetiring? Not so Fast..Hold Onto Your Bootstraps For A Long Road AheadMay 8, 2025 | American Hartford Gold (Ad)Insights Into Prestige Consumer Healthcare (PBH) Q4: Wall Street Projections for Key MetricsMay 7 at 11:03 AM | msn.comPrestige Consumer Healthcare (PBH) Reports Next Week: Wall Street Expects Earnings GrowthMay 1, 2025 | msn.comPrestige Consumer Healthcare (NYSE:PBH) Raised to "Buy" at StockNews.comApril 30, 2025 | americanbankingnews.comSee More Prestige Consumer Healthcare Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Prestige Consumer Healthcare? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Prestige Consumer Healthcare and other key companies, straight to your email. Email Address About Prestige Consumer HealthcarePrestige Consumer Healthcare (NYSE:PBH), together with its subsidiaries, develops, manufactures, markets, distributes, and sells over-the-counter (OTC) health and personal care products in the United States and internationally. The company operates in two segments, North American OTC Healthcare and International OTC Healthcare. It offers BC/Goody's analgesic powders, Boudreaux's Butt Paste baby ointments, Chloraseptic sore throat liquids and lozenges, Clear Eyes for eye redness relief, Compound W wart removals, DenTek for PEG oral care, Debrox ear wax removals, and Dramamine for motion sickness relief. The company also provides Fleet adult enemas/suppositories, Gaviscon upset stomach remedies, Luden's cough drops, Monistat vaginal anti-fungal, Nix lice/parasite treatments, Summer's Eve feminine hygiene, TheraTears dry eye relief, Fess nasal saline spray and washes, and Hydralyte for oral rehydration products. It sells its products through mass merchandisers; and drug, food, dollar, convenience, and club stores, as well as e-commerce channels. The company was formerly known as Prestige Brands Holdings, Inc. and changed its name to Prestige Consumer Healthcare Inc. in August 2018. Prestige Consumer Healthcare Inc. was founded in 1996 and is headquartered in Tarrytown, New York.View Prestige Consumer Healthcare ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Disney Stock Jumps on Earnings—Is the Magic Sustainable?Archer Stock Eyes Q1 Earnings After UAE UpdatesFord Motor Stock Rises After Earnings, But Momentum May Not Last Broadcom Stock Gets a Lift on Hyperscaler Earnings & CapEx BoostPalantir Stock Drops Despite Stellar Earnings: What's Next?Is Eli Lilly a Buy After Weak Earnings and CVS-Novo Partnership?Is Reddit Stock a Buy, Sell, or Hold After Earnings Release? 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There are 9 speakers on the call. Operator00:00:02Welcome to the Q1 2024 Prestige Consumer Healthcare, Inc. Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Phil Terpoli, VP of Investor Relations and Treasury. Operator00:00:41Please go ahead. Speaker 100:00:49Thanks, operator, and thank you to everyone who has joined today. On the call with me are Ron Lombardi, our Chairman, President and CEO and Christine Sacco, our CFO. On today's call, we'll review our Q1 fiscal 2024 results, discuss our full year outlook and then take questions from analysts. A slide presentation that accompanies today's call can be accessed by visiting prestigeconsumerhealthcare.com, clicking on the Investors link and then on today's webcast and presentation. Please remember some of the information contained in this presentation today includes non GAAP financial measures. Speaker 100:01:21Reconciliations to the nearest GAAP financial measures are included in our earnings release and our slide presentation. On today's call, management will make forward looking statements around risks and uncertainties, which are detailed in a complete Safe Harbor disclosure on Page 2 of the slide presentation that accompanies the call. These are important to review and contemplate. Business environment uncertainty remains heightened due to supply chain constraints and high inflation, which have numerous potential impacts. This means results could change at any time and the forecasted impact of risk considerations is the best estimate based on the information available as of today's date. Speaker 100:01:57Additional information concerning risk factors and cautionary statements are available in our most recent SEC filings and most recent company 10 ks. I'll now hand it over to our CEO, Ron Lombardi. Ron? Speaker 200:02:09Thanks, Seth. Let's begin on Slide 5. We are pleased with our start to the year as Q1 delivered solid results, thanks to our leading brands with continued momentum across our portfolio. We achieved net sales of $279,000,000 in Q1, slightly ahead of what we anticipated back in May. This performance continues to benefit from our broad portfolio and long term brand building efforts. Speaker 200:02:37These attributes drove solid 1.8 percent organic sales growth, including continued strong performance from Dramamine that I'll touch on in more detail shortly. These sales translated into solid profitability as we continue to operate with a strong EBITDA margin profile, generating robust earnings and free cash flow. We also experienced sequential improvement in gross margin, thanks to our pricing actions and cost saving measures that are effective against cost inflation. This stable financial profile enabled us to deploy capital efficiently. In the Q1, we completed our $25,000,000 share repurchase program, while still reducing leverage to 3.2x, thanks to our continued emphasis on debt reduction. Speaker 200:03:28Now let's turn to Page 6 to highlight the success of Dramamine in more detail. In Q1, Dramamine experienced solid double digit revenue growth, building on a long history of success that is driven by our time tested Brand building efforts. We do this by leveraging consumer insights where we look to meet ever evolving healthcare needs and find opportunities to grow the brand. Just like all of our key brands, Dramamine's objective of using numerous brand building tactics Consumer insights, the ability to grow the brand into adjacent categories over time and numerous marketing strategies that are time tested. For example, in the early days of our brand ownership, we expanded with new forms and flavors, launching highly successful less drowsy, non drowsy and great flavored offerings to help match consumers' needs. Speaker 200:04:37More recently, We developed our insight work even further and began addressing the distinctive nausea market with new Dramamine Nausea offerings, quickly becoming the number one brand in the category. These expansive items were successful, thanks to the underpinning of our long term brand building focus. For Dramamine, this has included highly recognizable marketing campaigns that engaged with consumers, reminding them of the benefits of the brand to treat motion sickness and nausea incidences whenever they arise. Shown in the lower right, this year our Ditch the Drama campaign features a memorable drama llama that only Dramamine can solve for. The results are clear. Speaker 200:05:24We've grown takeaways of the category and our brand, achieving a 12% compounded annual growth rate since fiscal 2019 around the time of the 2018 campaign shown here. This proven strategy is a playbook we use Across all of our brands to help expand our leading share and grow with retailers. Now let's turn to Slide 7 for an update on NYX. Our NYX brand is another example of brand building. NYX head lice treatments have gradually expanded their offering with consumers over time, which has helped deepen their connection with caretakers. Speaker 200:06:04Our insight work uncovered that consumers were looking for offerings not only for the treatment of lice, but for products that help ensure their removal and prevention of future occurrences. From this, we set to work developing new products to meet the needs of the consumer. Today, NYX offers a spectrum of head lice Products that most recently includes the efficacious NICS Treat and Prevent Kit that is off to a great start. As with Dramamine, these mix offerings are supported through effective marketing that set the brand up well to capitalize in category incident As headlight season is gradually returning to more normalized pre COVID levels, the brand is achieving sales well above the category In Q1, and as shown at the right, has expanded its leading number one market position in head lice to well above pre COVID share levels. So in summary, both Dramamine and Nix are timely examples of our brand building that we continue to execute across our portfolio to drive financial results. Speaker 200:07:15Now I'll pass it to Chris to walk through the financials. Speaker 300:07:18Thanks, Ron. Good morning, everyone. Let's turn to Slide 9 and review our Q1 fiscal 24 financial results. As a reminder, the information in today's presentation includes certain non GAAP information that reconciled to the closest GAAP measure in our earnings release. Q1 revenue of $279,300,000 increased 80 basis points versus the prior year and increased 180 basis points excluding the effects of foreign currency. Speaker 300:07:45As expected, EBITDA and EPS both declined slightly in Q1 from the prior year, but EBITDA margin remained consistent with our long term expectations. Let's turn to Slide 10 for more detail around consolidated results. As I just highlighted, our Q1 fiscal 2024 revenues increased 1.8% organically versus the prior year. By segment, excluding FX, North America segment revenues increased 1.8% and international segment increased 1 point 6% versus the prior year. The largest category growth drivers in Q1 were GI and Skin Care, including solid performance from Dramamine, which Ron discussed earlier. Speaker 300:08:27We also continue to experience year over year growth in the e commerce channel, Continuing the long term trend of higher online purchasing. Total company gross margin of 55.4% in the first quarter increased Sequentially, but declined 240 basis points versus last year's difficult comparison. This gross margin was as we expected and attributable to cost increases, partially offset by pricing actions and cost savings across our portfolio, which offset the dollar amount of inflationary cost headwinds. For the full year, we continue to anticipate gross margin flat to up slightly versus fiscal 2023 with Q2 estimated to be similar to Q1. As a percent of sales, advertising and marketing came in at 13% for the 1st fiscal quarter. Speaker 300:09:16For fiscal 2024, We still anticipate an A and M rate of just over 13% of sales and up in dollars versus the prior year. G and A expenses were 9.9 percent of sales in Q1 due to the timing of certain expenses. We still anticipate full year G and A dollars to decline slightly versus the prior year. Finally, diluted EPS of $1.06 compared to $1.09 in the prior year, down from the impact of cost increases and higher interest rates. For the remainder of fiscal 2024, we anticipate a Q2 interest expense similar to Q1, followed by lower interest expense in the second half. Speaker 300:09:56Finally, our Q1 tax rate of 22.5% was affected by the timing of certain discrete tax We anticipate a tax rate of approximately 24% for the remaining quarters of fiscal 2024. Now let's turn to Slide 11 and discuss cash flow. In Q1, we generated $46,600,000 in free cash flow, down versus the prior year due to the timing of working capital. We continue to maintain industry leading free cash flow and are maintaining our outlook for the full year. At June 30, our net debt was approximately $1,300,000,000 $1,000,000,000 of which is fixed, and we achieved a covenant defined leverage ratio of 3.2 times. Speaker 300:10:39We still anticipate being below 3 times leverage by fiscal year end. Lastly, in the quarter, we repurchased approximately 425,000 shares for $25,000,000 Completing the previously authorized share repurchase program. With that, I'll turn it back to Ron. Speaker 200:10:56Thanks, Chris. Let's turn to Slide 13 to wrap up. Our business continues to have solid momentum and our fiscal year is off to a good start. We are reaffirming our full year outlook, thanks to our diverse and leading consumer healthcare portfolio. For fiscal 2024, we continue to anticipate revenue of 1,000,000,001 $35,000,000,000 to $1,140,000,000 and organic revenue growth of approximately 1% to 2% versus fiscal 2023 Or organic revenue growth of 2% to 3% after excluding the planned strategic exit of non core private label business that we discussed on our May earnings call. Speaker 200:11:38For Q2, we anticipate revenue of approximately $285,000,000 down slightly from the prior year due largely to continued currency headwinds and the exit of private label. For EPS, we continue to anticipate diluted EPS of $4.27 to $4.32 for the full year. For Q2, we anticipate EPS of $1.07 up high single digits versus the prior year due to the timing of marketing spend. Lastly, we continue to anticipate free cash flow of $240,000,000 or more. We still expect being below 3.0x leverage by fiscal year end as we continue to execute our disciplined capital deployment strategy. Speaker 200:12:26With that, I'll open it up for questions. Operator? Operator00:12:34Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press star 1,000,000 on your telephone and wait for your name to be announced. Our first question comes from the line of Susan Anderson with Canaccord Genuity. Please proceed with your question. Speaker 400:13:13Hi, good morning. Nice job on the quarter. I was wondering if you could talk about the dynamic between units and pricing and if you expect to take more price throughout the year. And then also are you finally starting to see costs normalize with the chance for that to flow through the margins later in the year? Speaker 300:13:30Hey, good morning, Susan. This is Chris. So we talked about giving our full year fiscal 'twenty four guide contemplating about a point of growth from price and a point from volume. For Q1, the majority of the growth was price. Volume was essentially flat. Speaker 300:13:45The majority of the pricing was executed last year. So the benefit of the price will gradually reduce as the year progresses. In terms of inflation, it's coming in largely as expected, right? If you think about Our inflation is largely wage inflation, going to be pretty consistent. So we're beginning to see some relief on certain costs sequentially such as freight. Speaker 300:14:05It does take some time for that to work through the P and L. And as a reminder, we talk about freight being in the low to mid single digits for us. So Probably not going to have as big of an impact as you might hear from some others. So we're expecting inflation for the year to come in largely as expected and gross margin obviously to follow. Speaker 400:14:24Okay, great. And then maybe if I could ask just about Hydralyte and the international business in the quarter. I guess, was that Weaker than expected or just really the FX impact it can overcome? And then also how should we think about that growth going forward? Speaker 200:14:39Good morning, Susan. Ron here. So the international business excluding FX was up slightly, largely as anticipated For the year, again, our outlook for international growth for the full year is returning back to kind of historic levels of mid single digits. And we continue to feel that the business is in line to deliver that for the year. Speaker 400:15:03Okay, great. And then if I could add one last one just on inventory levels at retail. I guess, do you guys feel like they're kind of back to normal or are there still categories that Could maybe benefit from restocking? Speaker 200:15:20So for the most part, Susan, The inventory level at retail of our products has been pretty consistent over the last handful of quarters as the supply chain caught up last year. So No meaningful area of benefit for restocking this year, and the level seems to be pretty consistent. Again, it's something that we monitor On a weekly basis here. Speaker 400:15:45Okay, great. Thanks so much. Good luck the rest of the year. Speaker 200:15:48Thank you, Susan. Operator00:15:50One moment for our next question. Our next question comes from Rupesh Patik from Oppenheimer and Co. Please proceed with your question. Speaker 500:16:07Good morning. Thanks for taking my question and congrats on the quarter. So just on women's health, if you can just update us in terms of you think about that category for the balance of the year? Speaker 200:16:17Good morning, Mukesh. So I think as we stated back in May, we're Anticipating that our women's health business will begin to stabilize and get back in a position for long term growth. During the quarter, we continued to see year over year decline for the women's health, largely due to a continuing Slow down in the category. Both of our brands, Monistat and Summer's Eve continue to have a significant number one share in those Categories and are providing leadership with new product launches planned for later this year and when they hit retail, we'll talk about them more. But We continue to feel good about the positioning of those businesses for longer term growth. Speaker 500:17:04Great. And then in The cough and cold category, I know incidence levels were down this past quarter, but your sales held up pretty well. So just curious, I guess, how is cough and cold inventory now in the channel? Just any thoughts on that category for the balance of your year as well? Speaker 300:17:19Yes. Hey, Rupesh, this is Chris. So Q1 for cough, cold was really reflective of what we thought we issued a Back in May, we're expecting more normalized trends this year in terms of seasonality from the retailers around cough, cold, And we're also expecting incidences to be down from the peak levels last year and we've seen some of that already in the Southern Hemisphere. So The benefit we have this year, as you kind of alluded to, is that our continuous improvements in our supply chain will serve to fill a bit of pipe at the retailer level. But as a reminder, coughcold is not a meaningful driver of our business in the mid to high single digits as a percent of our top line. Speaker 500:17:59Okay, great. And then maybe just one final question. As you look at your different channels, are you seeing any channel shifts or anything of note? And then just relate to I know one There's some speculation that one of the pharmacy chains could be in trouble and may have to file for bankruptcy. Just any thoughts in terms of any risk that you see out there from inventory stocking based on your visibility? Speaker 200:18:18Yes. So I guess a few questions there. First of all, in terms of channel shift, and I think we've touched on this in past quarters, We've begun to see some movement in shoppers as they look for maybe different price value propositions. The benefit for us with a broadly distributed across all channels product offering is We catch up with the consumer no matter where they choose to shop. We want all of our retail partners to be successful. Speaker 200:18:49So We kind of just stand back and see where they go and catch them where they end up is the first part. In terms of the drug retailer you're alluding to, it's been on our radar screen for a while. It is not a significant customer For us, so it's something that we'll continue to monitor, but at this point, we wouldn't anticipate it having any meaningful impact on our business Or result in any kind of change in inventory at retail for us. Speaker 500:19:24Great. Thank you. I'll pass it along. Operator00:19:28One moment for our next question. Our next question comes from Jon Andersen with William Blair. Please proceed with your question. Speaker 600:19:46Thanks. Good morning, everybody. Hey, John. I guess, just start out with a question around sales. The business was up About 1%, a little less than 1% in the Q1, on what looks like To be one of the easier comps for the year. Speaker 600:20:10And just wondering, It sounds like the revenue growth met your expectations, but I think it also implies perhaps some acceleration As you move through the balance of the year and are we thinking about that the right way to kind of hit the 1% to 2% And guidance for the year and from what are you planning or seeing from a I don't know if it's innovation or marketing perspective or both That might drive some modest acceleration from here. Speaker 200:20:45Yes. Good morning, John. Speaker 300:20:45This is Chris. So you're right. We were up just under a point for the quarter. Remember, FX contributed a point of headwind in the Q1, so Almost 2% in the Q1 on an organic basis. What gives us confidence for the most part, we're not seeing anything different than what we communicated back in May. Speaker 300:21:03We're going to have Some FX headwinds in the first half, it will continue into Q2 and then we'll see a slight tailwind in the back half. Looking at fiscal 2024 from an absolute dollar basis, the numbers are more comparable. Sequentially, we're expecting less fluctuation in fiscal 2024 quarter to Quarter than in the prior year. So it's really the FX piece and the comps that when you look at the growth rates for this year. Speaker 600:21:30Okay. That's helpful. And then gross margin, as you mentioned, improved sequentially, which was good to see. Are we going should we expect to see steady sequential improvement going forward? Was Was the sequential improvement, I guess, in the quarter is what I'm asking. Speaker 600:21:50Was it more kind of seasonal or mix driven? Or is there something more Permanent going on here with pricing catching up with commodities, other cost productivity flowing through that could lead A string of sequential gross margin improvements during coming quarters. Speaker 300:22:10Yes. Hey, John. So Q1, Largely as expected, you're right. The upside was primarily mix in North America and to some extent the flow of cost savings. Remember in the Q1, Usually our highest gross margin of the year as we're selling through product that was purchased in the prior year. Speaker 300:22:28So as we look to The outer quarters, I'm expecting a pretty consistent sequencing from off of Q1. We talked about Q2 being similar to Q1. So that will be the impact of the new inflation for this year being offset to your point by cost saving efforts that we put into place. So we're expecting gross margin to be pretty consistent throughout the rest of this year. Speaker 600:22:50Okay. And then you talked quite a bit about Dramamine already And when you called out kind of the GI category strength, skin care, I think was another area You mentioned dermatologics strength. Were you referring to nicks there? I'm just trying to understand what's maybe driving some of the strength in that category or platform? Speaker 200:23:14Good morning, John. Skin benefited from good performance both in NYX and Compound W during the quarter. Speaker 600:23:24Okay. And then last, the leverage ratio has come down quite a bit, continues to come down, even with The share repo as you mentioned. If you reach 3 or sub-three by the end of the fiscal year, What how are your kind of thoughts around priorities on use of excess free cash evolving As the ratio comes down to what it pretty low levels historically for Prestige. Speaker 200:24:02Yes. So going forward, John, I don't see us changing our capital allocation Priority even when we get below 3 and even if we end up quite a bit below 3, where we'll look to 1st and foremost continue to invest In brand building and in our business, and then continuing to reduce debt, building M and A Capacity and continuing to be thoughtful and disciplined around future opportunities. Speaker 600:24:35Great. Thanks so much. Speaker 200:24:37Thank you, John. Operator00:24:40One moment for our next question. Our next question comes from the line of Mitchell Panaro with Certovant and Co. Please proceed with your question. Speaker 700:24:57Yes. Hey, good morning. Most of my questions were asked and answered, But I did hit one on advertising and marketing. So it would be advertising and marketing was down Year over year due to timing. And I'm just curious where your focus is on advertising and marketing. Speaker 700:25:23Is there any change to your focus in channel or product mix this year versus last year? Speaker 200:25:32Good morning, Mitch. So, our approach is really to Move our advertising and marketing resources and investments to where the opportunity is. So every year, we put together a plan based on opportunities, new product launches and what's going on and then evaluate and Change as needed. So, we continue to get behind Dramamine in a big way. We've got a lot of success there, Some new products that are doing well same with Nick. Speaker 200:26:05So, no real change in the approach in terms of investing where the opportunity or new products are. Speaker 700:26:14And channel, I mean, I'm not sure is this is Where is your advertising spend focused meaning are we talking With in store circulars, are we talking media, other media? Where is it Today, has it changed at all from prior years? Speaker 200:26:41Yes. Over the last couple of years, it's been Fairly consistent and again it's the mix is different brand by brand, but TV, digital, search, Investments in the dotcomsearchinparticular, right? We had another great quarter with our dotcom and Amazon Business Grew over double digits during the quarter, I think, and we're up to 11% of 11% or 12% of total revenue for the quarter. So again, we're pulsing the investment where we're getting growth and where the opportunity is. So no real change. Speaker 700:27:21Okay. That's all I have. Thank you very much. Speaker 200:27:24Thank you, Operator00:27:50Our next question comes from Anthony Lebiedzinski from Sidoti and Company. Please proceed with your question. Speaker 800:28:00Hello. This is Stephane Guillaume on for Anthony Lebiedzinski. How are you guys doing? Speaker 200:28:07Good. Good morning. Thank you. Speaker 800:28:10My first question is, have you seen any notable changes from private label competition? Speaker 300:28:18Yes. Hey, good morning. So, no, we haven't seen any meaningful changes on private label. Over the long term, we look back even to pre COVID levels. Generally speaking, the majority of our categories we've been gaining share over private label. Speaker 300:28:33We found that consumers go to the trusted brands in these categories that held true throughout COVID and seems to be holding true Today, we saw it back when the financial crisis happened. So over a long period of time, we've been able to hold or gain share over private label. Speaker 800:28:51Thank you. And given your solid free cash flow, do you have an appetite for additional share buybacks? Speaker 300:29:00Yes. So the share buyback program essentially serves to offset dilution. We'll continue obviously to look at it as we always do. But as Ron mentioned, right now, our cash flow priorities are to invest in the brands we have, continue to pay down debt and we'll continue to be mindful in the space in terms of M and A. Speaker 800:29:22Thank you for taking my questions. Thank Operator00:29:30you. I'm showing no further questions at this time. I would now like to turn the conference back to Ron Lombardi for closing remarks. Speaker 200:29:38Thank you, operator, and I'd like to thank everybody for joining us this morning and I look forward to updating you on our business next quarter. Have a great day. Operator00:29:48Thank you for your participation in today's conference. This does conclude the program. You may nowRead morePowered by