PBH - Earnings call transcript Q4 2018 | Prestige Consumer Healthcare Inc.

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Operator

Ladies and gentlemen, and welcome to the Fourth Quarter 2018 Prestige Brands Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time.

As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. Investor of Director Terpolilli, Relations. Phil begin. Sir, you may

Phil Terpolilli

everyone Thank phone. to you, and good operator, on the morning

on call our XXXX initial me of year, and questions call, Joining review the take will outlook our CEO; Chairman, Lombardi, we analysts. results, quarter, from and and President fiscal our the XXXX then Christine and the financial fiscal Sacco, cover CFO. fourth today's today On highlights are full Ron our provide

presentation which accompanies We have call. a slide today's

by it and Webcast Presentation. the presentation. slide access today's You measures. clicking link, and between Please presentation prestigebrands.com, of The can the Investors the adjusted in financial earnings reported visiting then release on some includes in on and non-GAAP financial and information reconciliations included today measures today's contained remember, are

management will Harbor complete a forward-looking slide presentation call. make detailed risks accompanying X the statements Safe we which and of today's the During call, uncertainties, on disclosure page on around

are filings Additional on I'll information concerning the available CEO, Brands' over the recent hand fiscal recent and Ron most it XX-K. walk our quarter to fourth our Prestige risk highlights to through factors our performance. most and cautionary Lombardi, statements of SEC

Ronald M. Lombardi

morning, and everyone. Phil good Thanks,

in driven EPS resulting growth in warehouse XX.X% up results. a which were on. net over X.X%. freight continued experience in Let's sales a last contains the adjusted sequential in the prior along fourth on our to the $X.XX X during QX core the detail cash the Pharma We strong costs XX% our growth provide especially a adjusted of additional opportunities include portfolio. later with solid free of for for tax $XX quarter earnings business by margin quarter in QX. in international of and across our improving Gross from of We're buyback creating us industry-leading progress our of today's de-lever I'll QX our versus higher increase Also flow flip program. strong such million reported rapidly quarter, our capital to spending, basis growth sales stock forma continues was versus while The at revenue portfolio And line came to solid results Pro discussed it benefit making against XX% year. our In Fleet gains, largely was an to Care quarter. as page cash presentation, million and $XXX summary, overview quarter expectation. allocation X.X% a $XX fourth EBITDA generation to and with low-capital margins, enables low rate. to million cash announcement Highlights

growth the versus year about full slide fiscal Turning we'll win in XXXX, year. and due approximately full versus prior coming $X.XX, X% market continued March's refinancing. an This and We $XXX fiscal during have to consumption progress profile improve rapidly in XX% de-lever year. and used of to Most X% areas positive with cash terms balance pro growth million was generation against momentum debt sheet strong in of our long-term retailer the revenue key our XXXX our forma our of successfully In free percentage point talk overview flow results. by trailing trends adjusted the consumers, delivered business. generated We to EPS generated adjusted at year share about which cash with of slides. up We importantly, our to year continued of prior strategies many reflected performance to X, we in we over destocking. a

slide X more Now in-depth turn review. to for a let's

spots branded in our categories XXXX the and success with our Fleet worked as the such the support well core of building around strategy. Goody's. Eve long-term our XXXX, franchises. execution We at consumption environment This example against well core BC continue OTC These on into company included excellent position translate to target. year. to challenging Summer's cash challenges This generation. legacy categories. as portfolio. the efforts another in warehousing the as be retailer increased higher We as OTC and to ongoing we categories and meaningfully in by focusing successful to faced of temporary to our transactions, consistent profile freight financial our In market brand, invested strong and retailers share as in destocking second is investments of growth diversified leading grew our healthcare bright a and our result XXXX half portfolio offset lingering brands brands from We for brand of consumer grow and high-end was the growing long-term brand some investments our continue costs

discuss that In Let's in shows our well presentation in slide these overall achieved label double more private of a hand of of the growth. detail ahead domestic X. building the left of of XXXX, was side growth and X.X%, Slide category which success. fiscal chart on both gives us growth. company view efforts big portfolio grew X each beginning brand our The almost picture and our category

of worth last side the you growth the brands trailed and our brands noting category weeks, see that grew XX right growth the that year, four-week core one-third core almost than over growth. is X.X%, slide, our and category On It's periods. both private better a growth which of also label

we've method As past, in discussed to are our wide drive growth. the this building ranging brand

BC Goody's. XX slide the timely to discuss example and and turn of Let's

category. reach Goody's consumers XXXX, entire leveraging through Our over of proven in the loyal back Minor achieving our strategically expanded distribution as Since and enhanced connection of customers. by better such Richard history in to iconic acquisition we've Dale building partnerships brand examples BC brands strategic partnerships BC success Earnhardt powdered They retailers these Powders our Petty, League with with We've the States. great Headache in XXX-year the Jr. truly our are region. and a represent playbook. Southeastern United are and brands Goody's and analgesic with essentially the Baseball

over brands years Cold combined meaningful new other building In BC have and test ahead we've ownership, including over preferences. of ownership, numerous brand After We've growing also we and grown a innovations will growth. strategy way XX% to category product consumer flavors new consumer meeting with Sinus, driven analgesic have six and well and extensions continue. focus the on a feedback, new growth. In We fiscal a audience. created marketing XXXX, this extensive of category larger reach since launched

moves help the launching easier-to-use packaging in future from growth. This stage same it package. the over process some take new format an product We for and rollout an simple-to-use details. set of the wrapper and even that take are will next will pack. will year a refreshed change It's trust in iconic Chris and stick know The packaging a to consumers that brand on make additional a comment the better place and

of we that Now, January over in positions first year let's we turn to now one In growth. Acquired Fleet. year, XX for its building full XXXX, have to long-term ownership. brand was applied slide Summer's Eve. completed and transaction the largest in to brand, us largest It well our Fleet discuss one formula history our our

of hygiene our to and share, a reminder, leading Eve a with brand efforts market feminine successful. category ability one building is representing It's grew a We long-term building share retailers and has brand of wide positioning. market grew number range the a a from formula As the perfect In Summer's category our new brand number targeted fit the of with through brand investments. was fiscal Eve benefit half for including a products. over Summer's XXXX,

year integration supply with integration executed brand and vast efforts quickly we chain forward. ownership of excited summary, In building spring. of successful are going the also first about completed investment a majority opportunities and the early We by continued had

portfolio characteristics how against the it and Now a has to efforts. us retail let's resulting our retailer turn XX. important and of to slide challenging It's destocking environment remember unique well-positioned

many portfolio advantaged Our in is ways.

range wide are engage off to than spend consumers from sales leader efficacy our brands We categories insights a XX% share often on therefore one experiences. working branded with we the competitive where approximately grow of market efforts to opportunities understand taking and idea category number coming and through share. We enhance and These our of categories to in we consumer brands. rather market build represent look a consumer this brand

portfolio ultimately adding value for basket with OTC retailers, helps ring our increasing long-term our traffic customers. (XX:XX:XX) and Our drive also

we driver for have traffic that a get This companywide evident in consumption retailers. X%. leading summary, brands focus So, to our valuable are and fiscal on nearly growth in categories We is experienced growing of results. XXXX

distinct two well the the remains slide cost fiscal remain from year, portfolio Although the with Beginning consumers that, second freight to long-term. win growth we were QX, turn faced XXXX. to a of partially With headwind our positioned business. our consumption costs in rates warehouse we and XX. to in revenue Higher had let's the during half disconnected over incremental

that at of experienced, resulted our First, the in workforce. turnover high third-party there warehouse was higher levels use an cost third-party but

higher the freight incurred decision pool costs September market freight of in began we a in our the levels as we This strategic of tight carriers we experience following with service maintain to Second, customers. our freight to expanded back XXXX. third beginning was quarter

in against Although costs are persisted these QX, progress these we temporary impacts. substantial making

our away return improve of cost intent the workforce the third-party X. as warehousing to from costs. these taking has high fully are We to structure the long-term level with transitioned On for cost site to a steps costs, temporary normalized April

next the of of hiring number an are for positive couple to incremental efficiencies. steps. this local We workforce of increase quarters we've the On expect over pleased staff and taken a freight, with

pricing rates. a broker we'll QX, including execute began we subsequent First, to to to away carrier from continue negotiated Fiscal improvement we higher XXXX, freight cost programs cost usage. shift as improve

these fiscal continued of XXXX, improvement see expect we both For around to factors.

that slide proven Now resulting cash history a the slide XX. we of the of This have to let's de-levering. flow achieved reminder is growth turn in

and to the cash on a shown resulting continues growth slide. significant building brand sales flow driver to the be trends Our consistent

the expect proven things XXXX announced cash generation net to de-leverage, by end to times as cash simultaneously generation approximately today's fiscal enables such ability stock expect reach The We X.X and fiscal to debt-to-EBITDA continue de-levering. also do and algorithm XXXX. this while our of buyback, of

to turn up. Let's to this section sum XX slide

Over delivered bottom and years, we've the line top results. impressive last six-plus

three-pillar capital brand reduced Our driven through building. a variety behind in leverage, has invested allocated our as we've portfolio strategy and M&A, successfully and ways results we've transformed of

Chris it let's QX turn through Now, who the detail. will financials over in walk to us

Christine Sacco

everyone. good you, and morning Thank Ron,

company's our versus X.X% results, and adjusted total quarter fiscal briefed see the detail sales, and On quarter item. the QX earlier, OTC year. core the well prior for included approximately across walk revenue from A&P XXXX context was which to year and X.X%, high but around fourth greater the a of of results full our of for of which as $X.XX consumption through growth continued forma fiscal year can per with share transition portfolio. quarter our EPS results. revenue the performance you strong the expectations Fleet QX XX% was was growth declined by and fourth by pro level affected in versus portfolio and period which of expectation, quarter line benefited partial XX.X% reviewed offer our growth as growth as Fleet include of I'll some year of slide Ron XX, fiscal XXXX As in line prior for

slide fiscal I'll provide to XX incremental year XXXX results turn some let's Now fiscal our and context consolidated discuss outlook. to where

in the reminder, in our adjusted includes reconciled results are a information earnings today's release. that As presentation

American came revenues XXXX portfolio margin our North continued sales and impact was which the Fleet gross the the revenue increased strong our as approximately than which reflecting results Ron XX.X% expected warehousing has Ron mix, billion. second by lower year gross OTC For of overall Pro half growth costs with for XXXX, and consumption year, full businesses earlier. $X.XXX to year the year, These forma the at net Adjusted heightened X.X%. in driven and International trends our full freight Fleet, in were of full core margin discussed the mentioned. the a XX% in

Looking gross year expect ahead, approximate to XXXX full margin we fiscal fiscal XXXX.

newly partially of Goody's update, half offset purposes, by warehousing net and modeling replace XXXX packaging surrounding related that transitionary the margin costs and which SKUs gradual legacy impact we products. launched costs to both are first gross our BC QX similar be to with margin gross to improvement and the to sales a XXXX freight would expected as For anticipate

invest for of of percent we which fiscal to basis in terms core at A&P, over brands. to in just behind came XXXX, but XX% grew dollars on year, similar prior revenue adjusted In a our as continued was we

brand For to line just sales. versus building fiscal seek over of XX% to grow top growth. XXXX and XXXX, as for is long-term be A&P we expect opportunities in expected we A&P actively fiscal dollars

in dollars of non-working our spend. in XXXX, in savings A&P cost fiscal reinvested levels which expect higher also We will be working

meaningfully to the would above the In A&P of second terms initiatives. marketing due spend expect timing first half we half cadence, of

spending expect the (XX:XX) percent Our [XX.X%] on year sales in adjusted total fiscal similar (sic) XX% came for full XXXX. G&A a fiscal at basis for G&A of revenues about of and we

included For be fiscal XXXX, expense, amortization and of approximately $XX in we million. will estimate cost not goods our sold, depreciation

below let's item. Now discuss line the

Tax meaningfully our incremental and in As discussed lowered enacted generate ongoing and last will quarter, Jobs the cash tax rate XXXX. Act Cuts flow

to We an of in down fiscal estimate approximately XXXX, continue tax percentage XXXX. points approximately fiscal effective XX rate XX% versus

interest We expense. are anticipating in approximately $XXX million

EPS for full the year. adjusted about X% our Finally, grew

over in Let's Starting and cash adjusted of fiscal a XXXX. slide flow on million and XXXX turn capital we the $XX year cash XX, our see million and free fiscal to XX slide you'll $XXX flow XX full slide discuss priorities. allocation for to QX review our generated

net $X at billion We a ratio just continued times with yearend. to year leverage under the X.X reduce debt, and of finishing

earlier, executed impact rising to As mitigate interest debt of in transactions Ron help highlighted March we the rates.

fixed Our XXXX rate now fiscal $XXX term unsecured no points, our our enabled to refinancing million to to The LIBOR XX-XX loan ratio with bonds. add-on incremental our debt of approximately plus is us of while fixed-to-floating XXX material of the XXXX. increase with is cost debt basis debt

capital XX, Turning review let's allocation our slide to priorities.

As discussed three-pillar in company past, has strategy. our consistent and we've repeatable the a

we pillar of disciplined to value of capital shareholder which is The the cash free is over maximize time. strategy flow third being allocators allocation, capital this generate

capacity brands us long to allocation allocate further sheet term our We continually two avenues first chart provides on concentrate points. to generation provide balance to continually multiple portfolio paramount options. reinvest in connection It capital flow of the cash consumers build is with to value. de-lever to our strong create Our success efforts to drive and our our to we'll

and as over value key six maximize of a the our shareholders. for Although been M&A how last assess transformed use has portfolio, capital allocation continually our years we've we to

look opportunity M&A XXXX, way stakeholders our repurchase. building, we outlook our surrounding remarks. to through value is unique by this the fiscal long-term de-lever future inhibiting pursue it to like I'd incremental some without to $XX value to a million closing to shareholder to discussion As an We believe add announced as our share now brand and fiscal for we to M&A a ability see there turn deliver invest to returning capital in shareholders XXXX and back opportunities. Ron beyond

Ronald M. Lombardi

Thanks, Chris.

on continue slide Let's XX.

creation. the business multi-year results Our our continue of positioned to highlight well long-term is success strategy our value and for how

Our assumption. our driven shifting positioned a is reduce Retailers into to consumer organic strong to well and trends. needs-based consumer brands expect which continue shopping retailer to retail going level, inventory by expectation we in and incorporated sales consolidation in general continue forward fiscal This dynamic, XXXX continue growth channel be environment.

$X.XXX plus billion to X.X This BC destocking a billion. For Goody's of number packaging. net as new launch a and the sales, well sales growth organic or plus X.X points we $X.XXX of from anticipate approximately sales revenue impact an incorporates point as in fiscal XXXX to net

expect owing We Chris and of to stronger in and described in a revenue the will second-half (XX:XX) be XXXX packaging primarily first-half change revenue that BC accounting versus Goody's recognition. around policies restage growth the earlier

$X.XX anticipate plus to to profitability, the EPS XX% year-over-year. or range For be of to $X.XX plus XX% we in

in our XXXX of concentrated Goody's largely upcoming brand EPS growth fiscal be the and We the we packaging as BC invest to transition. behind expect second including half efforts,

we more full million cash full or free Regarding for of the the for year. cash flow expect flow, year, $XXX

investments timing pack. few and driven I'd stick revenue we this and costs new as our the prior with by our slide revenue Although, revenue two elevated well year Goody's a slight recognition, impacted of note full launch comparison a on most is change revenue accounting still quarterly which decline closing, and in investors, QX. year, the freight are we'd for anticipate like projection EPS for the of leave as A&P XX. is by The like first reminders as year-over-year quarters. summarized we policies flat we to warehousing forecast In EPS the BC versus in difficult organic on year, always a focus and in along to revenue variability

results by that's continues three-pronged profiles, and financial our business strong repeatable on model by It's growing driven building effective, performance the last the our marketing lines long-term a building. in that take in years. reinvest capital and use delivering our approach that, strategic an share consumers. and look testament this a forward to up with long-term drive brand focus allocation. starts investments, to the Our strategy we the to on With for marketplace against XXXX. be again From to with helped a for multi-year of We is OTC open In cash generation winning let's brand the behind to sales questions. there, fiscal proven which remainder total, six-plus basis, a taking and we're strategy

Operator

first our from Altobello question with And James. Raymond Joe comes

is now open. line Your

Joseph Nicholas Altobello

Thanks. Hey, Good morning. guys.

terms of it mentioned, least guess is I the in expect at assume to should foreseeable our question you for destocking. about I X just that forward? So, additional a revenue mean headwind models to this going in point point do fair the outlook for year, first going growth future to you X.X that is destocking say be Ron, we

Ronald M. Lombardi

that Joe. trends Yeah, in over up X fiscal We saw in at we'll continue what impacted in be least these fiscal I we which think XXXX, but that's feel estimate, realized a we reasonable fiscal by about XXXX, was point to XXXX.

Joseph Nicholas Altobello

losing is share categories. earlier you categories really retailers encroachment, much traffic not at any sounds you terms label fact Okay, private are label of seeing in drive in to your feeling all? in pricing mentioned of way from in looking pressure the like But in you're great. And it pricing, private your

Ronald M. Lombardi

that function many we hear it's a Joe. And about. Not companies CPG the in talk facing of categories, kind brands really the fact other again, of have necessarily, headwinds same we're leading so that pricing not you

So, we're not necessarily realizing that.

Joseph Nicholas Altobello

Okay, great.

I last the assume sort to one the fact a The want get if rising point? X.X Just fiscal target target what's in you about Does times down by there share the you at long-term that of and this could. leverage we're end today, I one think any repurchases XXXX. that environment mentioned ratio, rate to of given

Christine Sacco

longer-term interest repurchase. Yeah, to levels Joe, conscious Yes, does historically. contemplate this the million at and certainly is environment, we're have rate past, share $XX this in of think, Chris, operating leverage in morning. X.X good we've the I discussed And a lower operate as than likely we

Our priority free number flow one cash our to for is de-lever.

so, And building, we that want to it brand while positioned wouldn't to opportunity going we be target forward. a certainly because pass and conscientious we move of as here well set on an for we're don't sit long-term leverage if us

Joseph Nicholas Altobello

Okay, great. Thank you.

Ronald M. Lombardi

Thank you, Joe.

Operator

And our William Andersen Jon you. comes Thank Blair. from question next with

open. Your line is now

Jon R. Andersen

everybody. morning Good

Ronald M. Lombardi

Jon. morning, Good

Jon R. Andersen

the performance you but the target as maybe six what any she if can XX-week your could three in kind for steady Thanks change bit trends, little label and been the it's categories or if of maybe to-date goes. for in I'm consumption things months if own last a you of to kind short-term move or wondering that your a consumption within own around sharing lot the your share closer about could talk know private compete or you've seen in. there's months data, at data talk a all of about brands. I you categories if basis,

Ronald M. Lombardi

Yeah.

first I consumption and in terms here, of questions guess trends of the couple business. for a So

year-to-year brands long quarter-to-quarter, We a consumption If across get in of are time, back portfolio. we that over driven. trends do notice our incident go that of look a you'll do from variability you number from have and period

from level it a a incident suffering impacted few affliction. years see fewer we did Monistat consumption that decline because was in example, ago, the For people

So, we do get variability.

to Our continue continue categories above and grow long-term compete in the trends to share. be that we we

for our we there the meaningfully outpacing label not that as you in So, next in. while, trends, categories been the quite performance private growing it emphasize just for the which in question compete we share, really around we have in categories is but private only long-term in, we again compete pointed up had was growing over like label importantly us. a The

Jon R. Andersen

on because then may theory theory shelf some a there's be And destocking that Thanks. inventory experiencing there, the destocking, space. you you're guess, out one I losing

of points and the a Procter quarter of function Is XXX anything kind of respect experiencing or become a it retailer industry opinion, the of it company-specific an your destocking with I perspective you're to to and more in there your efficient phenomenon chain, from brands destock. to this is your inventory commented about destock across category what think even I business? issue specific to broader industry-wide think is (XX:XX) efforts basis or

Ronald M. Lombardi

Yeah.

starters in for topics there. number So of – again,

shipments destocking to an retailer, business, have position impacting go track versus We into our our detailed way not so in consumption a and the it's on factual. it's opinion-based

the that's first part So, it. of

you is, drug to out what of happens The time look them and retailers Those happen adding strategic presence and time all to they're shelf. us retailers. come be of the focus be It we're loss they might our trying all for the time to line where positive at one and second the over make of to The of mention SKUs continues their increasing about go. accomplish. concern net with a SKU there a made where in things a the change at of that kind

the that's first part So of it.

Jon R. Andersen

one topic And to it's a pricing at tend pressure because like, in coming about list you that you this your when basis, you're such experiencing a on individual not you're like-for-like point focused on also Joe's brands think on, your back own price and time. not to question, important of on kind prices

strength them, Given the brands of and the categories nature is your point? within fair of that a the

Ronald M. Lombardi

statement. Yeah, that's a correct

Jon R. Andersen

growth up retail you. any a ratio, even kind stepping and of in drive tough what year, any level to that this up step is tough try in to A&P or The environment Okay. strong there of a at organic Last thought one backdrop? it thought that process kind of for higher to even of is debt retail spending Thank XX% thoughts the behind higher levels me. to A&P a sales what's and

Ronald M. Lombardi

Sure.

of more had So all into A&P appear savings what would next year in are spending. back cost that the largely our dollars terms our first of it and the linked dollars number to Fleet up we're of again is than a outlook are opportunities up as integration plowing we've

is dollar actually built spending up more we're plan than So detail our would A&P we've brand-by-brand second up. and taking marketing it our And appear.

So we look at execute out and available opportunities the there are can them. we against that how us to

So spending we're continuing line of beneficial gain. look in increased to where at opportunities maybe top terms

Operator

next Thank Wissink you. And Jefferies. question from with comes Steph our

Your line is now open.

Stephanie Wissink

they Thanks. Good morning everyone. is Can I'd like little a to Goody's dig lull into share course over back down you the or then stocks works us or the few where that packaged should what goods. to at the a rebranding of with the packaging, the of And just see as we period that is retailer new there next BC introduced expect bit repackaging. up, how and retail, you a existing weeks? ramp

Ronald M. Lombardi

SKUs timing to going good start to introducing different Steph, on brand the description Yeah. it, new have so year the we're of That's the be based a across resets. retailers way and their

to it's customer the year So take fiscal to this across rollout whole retailer base. our have going

as transition start the they'll their the to to package, packaging. the old a to level get and and the certain ready So stop bring will they inventories new down they'll ordering packaging, retailers, to new reorder then

realize will of the So on quarter-to-quarter. from that that's sales impact part one

from that other the implement retailers largest as as customers, this we'll from other as our some chargebacks slotting new also returns packaging. and The they is get charges well

about. a to that really part affects not is there, net item excited we it's sales, affecting it incur dollar-to-dollar This other also something those we the sales, gross gross only we're costs. hit net our as transitionary will hit rollout that's margins, as a but have So

on we for If XXX that at the been packaging the think you out the kind web. This literally of hasn't in deck have from the years thing. advertising literally found look packaging XXXXs side, from I changed left the page the we on

continue going the to better position think growth. we So product this is continued for to

Stephanie Wissink

do there about or comes re-launch post how the with structure Ron And, of any rebranding a brands? pricing repackaging, advantage pricing along think those a is you that

Ronald M. Lombardi

there's Yeah, parts two that. really to

a The help manufacturing this our first will time, new longer around secondly, cost of then roll as packaging. capacity versus a transitioning process, that it, we're improve gives the the we long-term is, which that over pricing And position proposition address as over well out. will we to the us existing added period

Stephanie Wissink

times, maybe half, of of your brands, that are the within QX All our as looking a cadence bit. should question the first I little is down the as data drivers the talk half and just what key stronger you numerous half you've final than bit right, second Can clearly the your the being year, about think outside said validate then you on some the other what that in into back back a of consumption what and BC good Goody's, milestones and see ramp key loaded we half, be acceleration? for to are

Christine Sacco

to as about magnitude some mentioned Ron and just contributing and we if the first you expecting second the obviously Maybe half, From flow half you Goody's fiscal well. will, a that's this just of BC, retailer to as broad comments cadence top-line given sales, Steph, of year, XXXX. the entire through think around is the mentioned percent that each their perspective, Chris.

going recognition, mentioned we in for into And we comp year. Ron P&L. various year. our our P&L, mentioned the that of Goody's around gradual of down essentially were And toughest the XXXX first remember to also for which Also worked timing A&P are we anticipating fiscal policy costs. The a the the XXXX, about warehousing of the half. to BC, specifically second certain mention the that weighted is, heavily change made the margin lines regarding I as our trade transition improvements half QX talked spend comps in then the our that pulls in also then third our just And cost forward the is the second accounting and gross then of around spends flow in is tougher first for through factor revenue recognized half fiscal freight

Ronald M. Lombardi

you comment actual the of what you for monthly is is, to there, tracking of a the consumption, disconnected history generic that of at end remind number being comment of your from I'd have a the reasons. come of out long other questions the company reports made these consumption one Steph, that like results

track first business. our It the especially Canada. growing fastest the the all all in are ones It U.S. track business. doesn't of which any track it the online. doesn't The doesn't is, channels of of It doesn't our track International

from delay new disconnects flow as year untracked, Our to is the launch well systems X point online into they that. before as a products, business doubled growth this that added which million are there we accurate, reports completely as $XX million, about the of often in $XX is as

And a the So disconnect. is as business a insight a addressing is isn't I've in phenomenon, investors with. a we question of been single new such every the what remind but don't is point on Goody's I'll or quarter that and you it how I've data for from of it eight this why often that we tracking. been meet use singular as the-data or rely years point piece here seems provide will like the And upon disconnect you it big to information BC correct this so expect there

Stephanie Wissink

for what initiatives? BC ask looking just your some Thanks, of at then of outside in Ron. Can key should follow-up, of a I from, be I Goody's retail, again, maybe that. visually brands as appreciate terms and we

Ronald M. Lombardi

Compound XXXX Yeah, Summer's Sinus fiscal successful around so In around digital and those XXXX, and so on BC fiscal continued new product to. rollouts. continue W build will very and cold, continued efforts had TV on-going daytime them in Eve, we expect to Nix brand we and launches momentum placements, building

of to about new But and of building as launching to that and day-in don't launched we terms help the it's got at them product other efforts to addition and in around continuing growing launch And being new and reasons. as prior year. it's we've talk product obvious for something anticipate bringing same on number this retail stuff really brand innovation focus more focus categories. we again to blocking day-out a In marketing of on tackling developments a well

Stephanie Wissink

Very guys. Thanks, Okay. helpful.

Ronald M. Lombardi

you. Thank

Operator

D.A. Thank our Weiser, from Bolton Davidson. question next you. And Linda comes

is Your open. now line

Linda Bolton Weiser

Hi.

million flow FY in free unadjusted it you give in...? to XXXX, So, first the like can of was everything $XXX what relative all, if included you like actual, me the the, cash

Christine Sacco

see earnings report. go million a is So one table number the of our adjusted Linda, of you year cash back the our free cash flow flow in adjusted, $XXX.X to in of free for the non-GAAP can you if which

Linda Bolton Weiser

for Okay. gap terms next projection and year, there of be flow? big will your And flow the a GAAP free for in cash the free cash then non-GAAP between

Christine Sacco

any At XXXX. adjustments if GAAP free to flow, we you will, anticipate fiscal this don't for point cash

Ronald M. Lombardi

And associated with acquisition. costs the were largely integration the XXXX associated in again the adjustments Fleet with

Christine Sacco

Yeah.

Linda Bolton Weiser

expect organic your always thinking margins Okay. was over sort that growth X%, I in then And not expansion top past sort if mean, Ron, the I you've then really are already the of line and margin just and to said high is of here. really your long-term.

EBITDA best your maybe. flat So margin at is

a lot algorithm the is we've perhaps over inflation seen. for of here you not like really, EBITDA if and So, just cost growth even declines get time and spikes

company, And you reactively for long-term. productivity are you not if inflation, just to margins rather ongoing the So, in ongoing going that of do bring about help stabilize you sort think some think into actually to forward? some I to you than might of respond how and kind do EBITDA there of mean look but experience to that margin productivity have declines opportunities EBITDA, maybe, declining a

Ronald M. Lombardi

Yeah.

XXXX, attributable issues reduction So realized talked of was and all to first margin and we gross right, margin. the warehouse freight that EBITDA largely that in in fiscal the an about, we've right, erosion

normalized recover So back fiscal XXXX we and level. expect in those a get to to

about fiscal Goody's in XXXX. and for we that XXXX, out away an rolling go we as impact talked fiscal from would earlier, packaging to BC new that addition In the expect

So, EBITDA factors we'd some to recover XXXX part. able fiscal XXXX, margins is of going two on after would that those if first the we be the fiscal forward look based you expect out the

The keeping margin and second part level the to a which margins, gross reduction improve we of way that for have EBITDA additional as we've stable time, initiative in high find industry. cost historically, and the is, resources way over trying gross a place. of increase end margin were at And actually the very a to looked long time is at A&P to other had

that as expect we go deal would to would Goody's cost we we margins. and – gross with and warehousing time associated and continue recover the the the focus clearly with react to and away margins launch, up that over freight BC improving go and So, costs the and on

Linda Bolton Weiser

Thanks. Okay.

Ronald M. Lombardi

Okay. Thank you.

Operator

you. Thank

Sidoti. from Our next with question comes Frank Camma

Your line open. is now

Frank Camma

Hey, guys. call. the Thanks for taking

Ronald M. Lombardi

Frank. morning, Good

Frank Camma

That's label only I is a is a not me Hey, to your is dollar there floating even fact about sell question. actual investors much like pricing. lot mean private really still amount? And questions how brands, over-the-counter you observation, and on of question it that My an business healthcare seems misunderstand your debt of products. model, and the

Christine Sacco

$X back the cash And of XX-XX announced about free turn number a we we our in refinancing we just plan as get rapidly a March, billion. Yeah. Since the forward. Frank, we're down about year fixed, the absent repurchase to look that flow floating. to majority we use about did half reminder as a

Frank Camma

what's roughly? And deck price Okay. that

Christine Sacco

from XXX of majority floating, at XXX basis So, the came priced basis $X is plus LIBOR LIBOR plus down billion points, points.

Frank Camma

Okay.

So about X.X%, right, roughly?

Christine Sacco

increase X%, around to year. expect will the Yep. standing and yeah, throughout Currently we it

Frank Camma

Okay.

you today's cost much that, in credit it So fix how to market, if to swaps would you? were buy

Christine Sacco

So, going the how about cash in as to I rate biggest that floating, on we So that's going in flow obviously swap. $X.X pricing a out is locking for much factor capital – how the can just down and think for delever and today generate? say the free into I'm we two thing to years. pay the billion interest the factored quickly fixed we structure us under and pricing is our biggest mean environment swap

in we'll And environment. do when they and debt floating advantage did And so, structure, of conscious our to very take we're arise continually that. opportunities continue rapidly, it, we this in looking as our we're March at cap of

Frank Camma

Thanks. That's all I Okay. Great. had.

Ronald M. Lombardi

Thank you, Frank.

Operator

I'm would Lombardi questions any now for any remarks. over Thank I this you. And Ron time. showing at back turn closing further not call the to to like

Ronald M. Lombardi

good you. Great. everyone today I'd us thank have joining like Thank a day. and for to just

Operator

Ladies Everyone may disconnect. you today's all today's conclude program and conference. and participating This you does for gentlemen, in thank have a day. wonderful

Prestige Consumer Healthcare (PBH) 10 May 182018 Q4 Earnings call transcript