PBH - Earnings call transcript Q4 2019 | Prestige Consumer Healthcare Inc.

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Operator

Good day ladies and gentlemen. And welcome to the Prestige Consumer Healthcare Fourth Quarter Fiscal 2019 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded. I would now like to turn the conference over to Phil Terpolilli, Director of Investor Relations. begin. may you Sir,

Phil Terpolilli

And to Shannon. phone. on good you, everyone morning, the Thank

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

clicking the accessed on presentation, which accompanies call release by We Reconciliation then visiting financial and slide be today’s today Remember www.prestigeconsumerhealthcare.com, in between Investors have and slide a earnings reported measures. and presentation. presentation measures, on the that today’s non-GAAP and information link presentation. can included financial are this today’s adjusted includes webcast some contained of in

management presentation statements on Harbor the Safe and today’s around a detail slide will disclosure we During forward-looking the risks accompanying in of make which uncertainties, complete call. Page two call,

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

Ron Lombardi

good Phil. morning you, And Thank everyone.

presentation. on Let’s the of Page begin five slide

adjusted Revenue of pleased particularly compared aisle. more year. than untracked profitability in core grew our included in which number and the a X.X% and by grew underpinned last versus impact strength of are by trends. year. XX% the EPS benefited results, This from were prior channels to was challenging over OTC our solid quarter driven in and fast-growing consumption trends which QX We Consumption with fourth levels, healthy revenue, performance brands, flow cough/cold position incident and offset in trends, cash our the healthy leading

to slide detail on turn more six, full year results. for Now our let’s

destocking revenue continued in capital challenges conjunction efforts, helped performance with with delivered offset For to profit environment to allocation result a that a and XXXX, of fiscal strategic consolidation our we retailer win pressure. and that solid were consumers which, faced

sales on an organic X% million, GI of were slightly strength strong Our positively versus eye consumption approximately categories. up approximately ear care net and $XXX health, women's and basis. in were by impacted driven Sales prior by year

Cleaning divestiture basis cash largely our addition, QX, were expectations. cash for with million a drivers out throughout at which margin changes pleased gross over gross the strategic inventory XX%, full points positive pay were These year, now International rolled as along has faced its the enabled our segment expectations. about I’m particularly we’ve in after through remained X% In of This versus spite the feel as retailers, up strong reductions to came free year was margin across The the our the for business the long continue in term FX. year. headwinds the well stock of trends $XXX ‘XX. to Household the aligned of is flow in report Goody’s in for Adjusted $XX adjusting destocking the offset grew during flow, summary, channels. our on certain over redesign packaging, partially initial we year. consumer fiscal drug discussed at & made positive company and BC care and $XXX at repurchase sell inventory XXX category. of Total with oral continual debt line in additional shelf provide by Chris later. progress prior feedback with good consolidation approximately in solid opportunistic comments year and million trends with and In million of down to will

our let’s the ‘XX context results against how X-pillar of in simple, performed fiscal review our our strategy. turn slide to So yet eight, to effective

comprised is with which to strategy, winning X-pillar our capital shareholder and disciplined in flow consumers, profile enhance our allocation our of top these In of pillars. against growing cash financial with value. along strong by line XXXX, delivered confidence we each approach maintaining have We fiscal

investing launched category first dividends. us In our new brand pillar, pay year. we for These during of our continues driving ‘XX, growth, number building for brands. efforts market of a fiscal term long continued the products share to Our our continue successful helped and and history growth

which building included Our so overall leading and with this brands by pleased consumption our underpinned for were the growth efforts, year. approximately brand strategy is X% we performance,

cash Second, generation.

As low minimal of our margins, industry we I tax cash from key part our spending of continues benefit This generated generation strategy, $XXX is capital million earlier, third rate. enabler allocation mentioned a and cash capital to EBITDA to leading optionality. free flow, cash which the

we capital allocation, with our pleased during actions the were For year.

of a a round healthy level focus flow provides free actions allocation us addition to consistent to flexibility Our debt in opportunistic cash with capital reduction. take on

achieved we future environment, X As ratio $XX a has us of ‘XX, mentioned reduced of success. top strategy debt in earlier, end over positioned our the at stock a $XXX on of by our well we retail times challenging million million fiscal Even leverage and buyback. our for

Having long share diverse and nine. ability Now is the a I right mix, diverse point positions side strategy. brand just as discussed leading let’s of slide our our and ultimately to The starting in term portfolio of our a brand succeeding due the strong the and strategy leading underpins hand shown to execute turn place page. to and market on platform

brand us execute on we brand partners the we enables use market retail us goal to distinctive are six end thirds On consumers. efforts, have as Our through and building which the two brands driving diversification share examples category With portfolio of a slide our approaches. benefits launch and that focused our representing as approximately XX, one during number building well variety the growth strategy these year. wide also of of sales,

categories. better and We are names providing into and consumer experiences, leading extending consumer brands by new innovation expand to channels leveraging

awareness. multiple new a the fresh an the the including end of launching, expands acts Eve’s increasing to cycle us DenTek fitting. Summer of OTC on increasing as the has brand with brand’s are consumers. lightweight the designed ultimate [inaudible] connection For guard solidify to meanwhile executing into innovation of products Dental Guard, dental dental example, our consumer goal two and alternative position with as examples many just number professional and one These

break of a and For building of XXXX more brand turn executing on our in approach a depth but increase in usage example consumer smart, discuss innovation do slide new let’s and insights growth acquired barriers while can underinvested, reinvigorate to long utilize textbook brand our leading playbook, brand meaningful was The term down users. this brand is XX and Dramamine leading in brand. bringing strategy and building into and to to this example how an is for The brand Dramamine.

leveraged creative team We design. well messaging packaging. entire revitalizing was step as to as first our improve Our

distinctive category both also under nausea as that for of alleviate Dramamine the consumer feedback to well Dramamine-N addressed The Non-Drowsy a driving and with expand We double winning label consumers more the and results Most Nausea. the used for consumer launching around help these reach we’ve kids, acquisition, a has Drowsy Less product to and with than a since concerns growth brand product retailers. trusted market grown efforts is the offering as version by version recently, drowsiness.

a great Acquired Hydralyte. discuss our the XXXX term represents brand growth. XX, growing example success Let’s drive our and over Hydralyte driver base, largest turn international our big long Australia. example, second is XX% XX%. rehydration slide of by in sales building over to utilizing oral fiscal XXXX, segment brand of solid in to With to and another in category growth Hydralyte, in it category strategy, by the a continues brand total Australia, our

building as development usage targeted expanded Here, ongoing media new spend, product success occasions and brand distribution. our from involved well has TV playbook extending traditional messaging, as ad digital to through shifting

see awareness increased for penetration the ample Going growth further an we brand of for forward, growing the household and runway through brand.

largest to fiscal slide XX, performance in of a review turn Now for our ‘XX. let’s brand’s

During the term. term seen brand is over of the long investments. just largest vast important, our of continuation is building of is as a Having trends strategy a growth, one the success the our important number outpaced This long we’ve and brands but which leading year, category majority we the brands categories, crowded brands, efforts XX% consumer allows lead consumers. leveraging categories, our the on brand by wide most grow a our in than concentrate of that here category retailers to enable us that This many importantly, to is insights competitor. larger next slot, fact for and result margin share competitive

Chris The leading portfolio to term. and now enabled brand With brand we growing fiscal the This So positions valuable fluctuations. to retailers. foundation I’ll financials. diverse, in in growth have solid, driver that, of the on to allowing are the term focus growth over us companywide assumption impact and traffic brands mitigate it to turn that us over our deliver for long summary, near is ‘XX, get to generate sustained discuss the categories us

Christine Sacco

everyone. our we ahead to results in offer expectations like you, certain greater to well as Thank as as walk ‘XX. good morning Ron, fiscal I’d look through fourth and detail quarter

XX, are high As a that fourth see our reminder, On results level today’s earnings presentation reconciled year includes can in full in adjusted results. you release. the quarter information slide our and

an $XXX organic of X% approximately fourth included on this the quarter, basis. up million, For revenue

prior approximately household As EPS versus to Ron we as year, due Adjusted QX strong on [inaudible]. consumptions continue XX% well favorable deliver the rate decreased year. QX versus earlier, year, as a driven touched prior slightly the the tax overall benefited this by profitability the in versus strong international in from Adjusted was EBITDA prior as to increased primarily and divestiture.

more XX, Now detail. slide I’ll let’s in consolidated turn to discuss results where

approximately For an of slightly the our foreign after million, decreased but organic revenues basis full household $XXX fiscal effects up the excluding and currency. divestiture X% year to the ‘XX, net were on

as retailer BC was of as new inventory packaging. impacted the reductions top also Our well line launch & Goody’s by

P&L, year, from full divestiture basis Cleaning primarily of XX% benefited Household adjusted came segments the margin lower for the for the down gross points. the in up margin year. at We the Moving XXX

XX.X%, For expect to we flat margin approximate ‘XX, to our fiscal performance. essentially QX gross

the the rollout, Goody’s following as costs divestiture. costs As reminder, remain we BC continue packaging Household business, Cleaning to with previously well certain as a which experience & transition to associated allocated

Regarding XX.X% fiscal in A&P, at in ‘XX. revenue of we came

Looking approximate of higher percentage the we as full fiscal half of revenue ahead a XX.X% year to to A&P expect a spend ‘XX, first spend revenue. A&P again in with

As spend our revenues just was expected, total ‘XX. under in G&A of fiscal X% adjusted

fixed a as largely as result household dollars forward. and of a G&A are is we As result of move deleveraging modest the the divestiture reminder,

due slightly X% to and fiscal G&A half we timing. the first heavily weighted ‘XX, anticipate more For above would to certain expense expense

and For depreciation roughly amortization, ‘XX was flat, impact. divestiture excluding the household our fiscal

than we year, full up offset ‘XX, the of as earnings prior expense, goods more Last, approximately to divestiture not for per we’ve G&A favorable $XX the versus million. sold, we from year the anticipate fiscal in approximate discussed. adjusted impact household X% For $X.XX tax reported the of included a cost rate share

we an we which is forward fiscal approximate to of XX.X%, ‘XX, rate move As fiscal anticipate effective ‘XX. tax to

expense as interest of million reduce anticipate to also continue we debt. $XX We approximately

on, like that primarily segment; Cleaning move following factors: to impairments. exclude and of divestiture Before point goodwill intangible we tax I’d Household results these out reform; non-cash the and the Adjustments our related to adjusted

Regarding flows projections brand which was from as of time name. the applied The to fiscal the cash individual original discount primarily net versus the reported we assessment, well to the $XXX.X an brand DenTek valuation ‘XX, impairments; versus company’s the performed at charge as affected how rate prior by acquisition. years a increase of resulted used annual million Efferdent future related non-cash Fleet, our in charge and

do rules exceeded As time up brands accounting the their that a write value acquisition. reminder, value have versus of fair not of the

that As our carrying our have the its It’s no for adjustments exceeded value term impact these has our down important value. of brand Boudreaux’s for Fleet brand, an business the whole. as long a or meaningfully while we’ve remember example, written outlook performance the company expectations to on our

flow. down XX, household generated for the slide Now cash in QX, slightly bringing we the to let’s $XX.X to full million adjusted cash to flow, our In free $XXX.X due free turn to cash the million, flow divestiture. total year discuss

‘XX. free to maintain of industry XXX% for approximately continue flow leading conversion We fiscal cash

to well equates during million fiscal $XXX debt flow EPS. a cash at debt XX, EBITDA net in by per free $X.X billion to year After reducing was of March $X.XX to times. full X net our leverage Our excess equated share, of and ratio debt year, the

flow debt using anticipate cash to for continued principally We reduction. free

deleveraging. the gradual on can our graph, shown As to you commitment see

to other an cash free flow ‘XX, times in leverage for us would reduction debt Excluding capital potential X.X using bring uses, fiscal approximate ratio.

XX to to Now let’s in turn discuss more capital detail. allocation slide

share balancing the Our critical various disciplined in priorities cash the in what remain opportunity fiscal this deleveraging could free assuming the use discussed constant is would years over chart rate, our a generation next on the consistent This provide cash strategy. and guidance meaningful based as the of continues over opportunistic Simply third we optionality. discipline brands, provides with our of illustrates. we’ve of past, million strategy, a allocation $XXX at against three key for our ‘XX allocation purchases. flow pillar generate Efficient capital X-pillar that priorities investing and our capital

million to times, leverage of times. just would a to of long example, of debt target range of today’s bring For times reduction profile X.X us $XXX below a X ratio our term X.X to

changing share of Second, announced our utilized, fiscal we a share our This purchases. ‘XX, expect one flow, we strong which, represent other opportunistic $XX if repurchase fully cash delivering to authorization without priorities. allocation continue to morning, shareholder evaluate approximately quarter capital would value million for

company, been over driver M&A term years. a these its our has building last long against our evaluating out of six-plus return This M&A. is the Ultimately, potential. other of priorities strong when for portfolio value Third, weighted brands

long expect disciplined to now adding part continue we of this allows the optionality. shareholder for to important discussion Over to M&A deleveraging and outlook for back value, like closing surrounding generation term, and Ron remain some it cash and remarks. strategy I’d our to turn our to our an

Ron Lombardi

Thanks, Chris.

XX. and on with up outlook fiscal slide wrap closing our ‘XX, Let’s remark some for

For X% year. sales, with million in fiscal be range net organic to full $XXX anticipate consumption of ‘XX growth flat. revenue approximately approximately anticipate to the of growth the $XXX We for approximately we million

inventory will and to is most sales, in driven growth meaningfully significant fiscal expect during where drug the full exceed expectation Our channel by experienced notably year reductions consumption fiscal we XX. that ‘XX again

$X.XX $X.XX anticipate slightly flat to profitability, approximately to of EPS For we up in to range be the or year-over-year.

and of in loss the Cleaning $XX respectively by offset of Here, approximately were million benefit $X.XX, EPS, of leverage fiscal one sales which financial is quarter the and Household XXXX. partially

heavily to timing, to of terms what similar the during of of ‘XX. in EPS realized half G&A and to anticipate second In would we due weighted ‘XX, timing spending be half first A&P more we the the fiscal in fiscal

Regarding cash shareholder gain $XXX to long-term In our to sound. fiscal full year we earnings flow were or improve remains cash expect million share strategy market in more. value summary, free cash drive of leading ‘XX the We strategy, improved a $XXX flow, challenging and environment able driven strength our our by portfolio and brands. completed solid Household reduce We our by of margins flow, the to to successfully our diverse segment, of gross allowing due of divestiture debt us Cleaning had million. retail

providing innovation a market Our efforts drive these to now company growth through for record share heritage, and continue in growth. operator will of over development, overall to it brand category has channel strong and I’ll we turn questions. long-term product the our and

Operator

Instructions]. Thank you. [Operator

James. from comes question Altobello with first Raymond Our Joe

Adam Kozek

and points expected XXX can plans guys. add quick color International a one a Hi curious up, is America This for XXX if more, with that down couple if perhaps, the curious bit down for quarter modestly North on this lot I was was given actually for the or sales on OTC I you year. had Adam Joe. organic American to around be about gross be a your I year questions. margin in turning maybe basis will North Thanks helpful? was more guys. and I

Christine Sacco

is Chris. Adam, this morning Good

We’ve and to expectations. results retailer So our obviously been know some with OTC line our came regarding North in top the you inventory in, line, destocking America for time relative about talking business. it’s

we’ve some margin, packaging, that household BC Reminder the the have experienced is with fiscal and impacted the in, in for with related business, costs that us, company. in costs following our the segment that which we coming to gross the transition also ‘XX & divestiture some North On the Goody’s obviously expectations stranded in-line again and remain America.

Adam Kozek

how And one recognition I more curious line the of to accounting could one, it. if ask the quick Got also revenue top we’re much had in quarter?

Christine Sacco

year then a from QX for so our perspective in-line with essentially expectations, was we and flat. it full Yes, benefited slightly

fiscal going an be apples-to-apples Going will comparison forward into on that factors forward. ‘XX

Adam Kozek

much. so Thanks Great.

Operator

Thank you.

question comes William next Blair. Jon with Our from Andersen

Jon Andersen

Thanks everybody, morning. and good

Ron Lombardi

good Jon, morning. Hi

Christine Sacco

Jon. morning Good

Jon Andersen

margins stab at that on there Or mix OTC in kind Is margin I guess the kind issue question stranded want more is stranded being Is a of as just kind G&A it being experiencing? take down the the a Household a really divestiture. quick earlier of the gross any that of down, quarter. margin impact? of pricing pressure a would just another, overhead to you’re in be because think to the lingers, would I I a gross of opposed overhead impact issue?

Christine Sacco

a Yes, of impacting that a of couple result are Jon, so us Household. as things

you that net household business, a that And to of First of an will. the cost obviously impact riding about talked think an with be previously so to in on about think lose on we so right you if divest is consolidated truck that then, - to cost the example, Household Household, and some it distribution synergy that OTC on gross has as used were allocated from a riding we and you remain were when that manner, if margin. that truck the products

the about guiding So to margin contributing to. year, line were came But factors for we those which is the with and the our what again, are expectations was our efficiency. it at XX% in margin in

Jon Andersen

Okay.

Ron Lombardi

terms there. continue pricing pricing, see to consistent fairly we Jon, of in out

that. we’re necessarily So impacted not being negatively by

Jon Andersen

just channels? pricing there aggregate, intensity, can as, consistent, depth, kind could if interpret I Fairly and board, and the frequency Okay. you across comment, of like of know the the on also changes that maybe in any Ron promotion just pretty uniform portfolio across and you any

Ron Lombardi

our based nature Yes, and portfolio. of and about one position of in consistent those our don’t again, this know face the our portfolio it benefit. of times we’ve number one face, needs so Then over benefits the across and products years, you leadership, talked the the many so a many that is pricing that competitive we other we have number pressures categories categories is of

In doesn’t its you again terms cause needs promoting people based, if product, it either need it or of promotion, buy don’t. you the to

not effort. in So any promotional our we’re change seeing

Jon Andersen

Okay.

I of think assumes XXXX. terms X% In consumption mentioned about guidance consumption, for your earlier fiscal growth you’ve

can to I you same very consumption think recent as you been that, as rates causing what’s XXXX do whole? the at back a least at have number and that on which of to the see see growth in months. horizon X% sub understand look Are thing, you what fiscal X% seeing incomplete. a you I get know is what and we kind

Ron Lombardi

So those out there that Nielsen really that disconnect between and are IRI generic reports continue.

we As we business continue X% remarks fast-growing of XX% growth piece business Amazon That a from growing last today, the during has mentioned of us. nearly our benefit in our grew prepared quarter. channels, the to international up last fast for for been very year. untracked was over point for adding example, almost

accurate. and our reports get we complete that So own customized are

So, of reports don’t we that there. about worry kind other are those out

just they be general, in So, Jon inaccurate. to and incomplete continue

Jon Andersen

and So, wish we could the incomplete get your pay not for ones. reports

Ron Lombardi

Yes.

Jon Andersen

very guess other kind that. really trying end more of think get at the on in on at with, the Has there What for inventory is one the a that what There recently? pulling of retailer light impact you reductions. I I to it have Just moderated the a tunnel of whether a is and quarter, retail bit? sense seen Has a the aggressive kind any The pace? the continued see did quarter. big was you in quarter December late March question, in back

Ron Lombardi

less It more or hits we see selling see any us, or for meaningful benefits. concentrated disconnect destocking didn’t any we didn’t so and was between the - quarter for consumption

quarter important in it’s we we March. prudent see for recovery that approach. But any ‘XX, didn’t to really took note a think So the I fiscal ended

inventories, fiscal publicly back struggle to not or announcements declining stores you in are and about You in about think destocking closed year-over-year expect continued they they we each closed know the channel, sales, whether as it’s only drug centers. distribution channel, plans their stand if ‘XX impact to continue with reduce but making

either you finding to of bottom channel, wage, resources know hanging they’re online their And over goals the the that store line their you finally, to sure objectives then in to higher and on $XX every If minimum wage offset regional an cash their positions invest pick are while the ways line initiatives. in hour know in you look to to meet mass time. or continue rates opportunity they bottom and looking at help needed finding take investment inventory for or looking players and up their at make

thought what gave So as described. those bit reflect increased little headwind to our ‘XX, given prudent we I a we not but of outlook it’d factors saw an ‘XX, also for fiscal we expect only in just be

Jon Andersen

Okay, that’s very helpful.

success? around one can new I of in the with the about Just been more couple guess know haven’t the maybe had positively? it Goody’s the a measure has you from and what and to received questions, been, packaging, a to this myself, and get respect but the that? I of you I’ve you some bit sell back like, packaging there seen because know talk little been Has & the Has the queue. BC that’s universally of reactions consumers, important, pushback most some through maybe ultimate,

Ron Lombardi

all So, packaging widely first by been the the as of expected. users accepted new has

did the to right it a the going be lot to talking proposition. we and with know consumers was make work in product sure of designing You

package to get been acceptance in-line consumers going more than online go XXX on make has change that’s and You to something but largely we a you general there of expected. know, in what anytime years, the with been it, make for new adoption comments out compassionate and you’re the

Jon Andersen

as trends right are brand positive consumption whole And now? seeing a you for the

Ron Lombardi

Yes, brand. with we trends for we’re realized line long that back term the in the

Jon Andersen

Great. much. Thanks so

Ron Lombardi

Thank you, Jon.

Operator

you. Thank

Our next question from Wissink Jefferies. comes Steph with

is line Your open.

Steph Wissink

little recognition revenue everyone. a bit deeply. good just to unpack wanted Chris, Thanks, more morning the I

wondering in quarter us? in quantify XX-Q, scale that Is $X.X know, numbers. I of benefit? fourth if about for but think the to mentioned you an you the disclosed it it the hit million that you reversal the did the I’m your or was slightly, can year-to-date I

Christine Sacco

they recognition. are which two about separate half first when quarter, was talk the received the benefits in go talk hit, recognize because we this gross back, we half real slightly for you we Remember, about benefited was if QX will Steph, When flat that second me year, That revenue flat. we a the timing essentially and Yes, let right? just issues essentially relates spend, we and certain help, full that’s activity net, promotional accounting, that’s impacts our the of year to when numbers. again to within in being was real

will think referring a which under XX-K, recognition what as calculation you’re I old in XX-Qs and were our if is still appears appear policy. to in us that revenue asking to our and footnote is calculate the essentially a hypothetical back we go

don’t So, policy to it’s at like a variability folks under an will. remind people we we’re like remind that apples-and-orange the literature. accounting compare, lot there’s We, frankly you I’d business I’d not the managing of it, away. that if there. quite to because change look

don’t customers of more inventory. a just more all Our sudden orders place or take

us other direction given If in we the number swung more quarter the would that reported. than $XX million and third have you actually in almost sales recall, of

to So that, and not actually the there and referring talking we’re negligible when but that number us The revenue in to year. number footnote is recognition vary, about about the number can comparisons. slight things, to number that influence very different very a was what talk we’re QX appears full a we the the help are two

Steph Wissink

Okay.

to of that adjusted what the So in measure, a the Again, revenue would a the full basis of was, trying organic maybe out us to year, the I’m for but why a relative seem on fairly is know to the trying growth quarter just you like your for deceleration? recognition no guidance. deceleration. want do benefits. reconcile, year way, asked of to sense a It coming different kind change, you expectation of understand such meaningful a final give

Christine Sacco

Sure.

the than the organic point a for quarter, rec half was revenue fourth to So impact the our of growth. less

Steph Wissink

very And that’s destocking. if so on the just I could then Okay, helpful.

But which we of you’ve consumption to about consumption. at drag, more should about ‘XX Because too, as think there behind organic talked fiscal is to bit guidance? about it XXX tends it should out destocking we bit in growing basis how a to a How run times. think kind I a same, nets that’s maybe headwind a historic framework, is basis which relative XX kind the a your to framework? of plan, about think little the point

Ron Lombardi

Steph, Yes that’s it. exactly

points, fiscal our was consumption X% know up, flat. ‘XX, basis couple and were potentially about in you a of sales So organic

we’re we X% activity. level essentially and ‘XX, what So that for disconnect, of is planning that’s saw same

Steph Wissink

the brands in terms acquisitions that how XX five How you’ve and of enhance just about, Okay, about years you. talked about, value. thank don’t value we’re how strategy last question on you over appreciate from then of or should of just size and valuation? that Chris, back paid, future we final on acquisitions increase that looking know impairment just And think questions took, in any the this lot influences getting to you the the and think impairments, that of you morning, a I the you get you benefit

Ron Lombardi

Summer’s was had if portfolio a back portfolio, look and the Steph, when Boudreaux’s acquisition and back her you this Phazyme a we we so prepared had a number buy of So addressed that Eve in way other that which Efferdent, included which and brands. that in impairments and Fleet remarks was today broad Blacksmith for is Chris in today

of You the you may know or the you but your acquired better, at what generally some those you that for it time better. time than but Inevitably, for some and estimate accounting when when do hits the brands ignore allocate you at purchase do brands know be above you ends might happen in you base of better do you portfolio with the the what think acquisition, being you below, to works is, time, over think fact is the guess. below. you going despite what entire best the you thought, in the line The net acquisition, of the think way some price on line that them recognize do that up the you brands brands be it’s

would. got they to we portfolio there, we performing of value the right. just had was Phazyme that of to brands value fair killing were we years an example, recognize Ecotrin, are we above the today Even impairment. than for ago allocated other for Boudreaux BC or which GSK. better the also back GSK, ignored, out there thing we and Same this They it, huge push ignored & from that cushion yet way in Goody’s. are had thought we going wasn’t gets much but Efferdent meaningful couple So that a what impairment The called for on acquired part Fleet

what to we found bit than that, to a initially specialty a going work different ability continue peg thought, about it’s in feel provide bit leadership take is the lumpy. very we is and with and longer to going to it’s Now to be little us good that also more long-term that, section, bit retailers DenTek we a our although

couple we we go of shelf, XX%, because some about back you if Now at a that had win a grew years it. way, saw of changes what other kind big year the reversing went at ago, retail DenTek changes this

the things our about is overall we We when long this strategic brand back, good still on about about note digit on topic. the bottom good feel examples still that’s term the net today X% position and last of this there this portfolio, execute you good some term. our for but of growth we the drive over it, all important mid-single topic Steph, total strategy, our position that that that on line fundamentally feel top together, outlook think to and feel we to step comment of and So and ability our growth I line the long X% are

Steph Wissink

helpful. very Very, you. Thank

Ron Lombardi

Sure.

Operator

you. Thank

with next from comes Weiser Bolton Davidson. Our question Linda D.A.

Your open. is line

Linda Bolton Weiser

Hi.

terms a free cash adjusted the in unadjusted be quick FY you Chris, flow question flow? and guidance ‘XX, the do expect delta a cash to there free between for of the for Just

Christine Sacco

at we’re No, calling adjustments not this time, your any results fiscal ‘XX. GAAP to for for

Linda Bolton Weiser

seeing products. Okay. your of label generally And in little in do in private of that? the you give of you broadly to sometimes terms just how and private private trends label of tends less a on well on shares? that’s you you you’re some a Can share your to know versus And comparing speaking, sometime. comment then, a stronger own comment bit few speaking examples label us trends some Can economy

Ron Lombardi

Sure. and in label Linda, in. compete label the we versus that to take categories we private private continue share outgrow

continues has So, for very very, long in time. a that trend been and place

there and categories taking that big or of gaining whether other heartburn in that is difference we’re confusion bit like label that big share label private Switch, large or sometimes tablet there’s analgesics. who or private are categories know, spaces private in is is the label smoking claiming in Rx-to-OTC like an the players not You where allergy And is other compete that a is, don’t it’s competing we cessation in, share.

are branded You whether those know differentiator it’s a competitor, that and bring products new we are and that’s for other there. between label, we heritage driver or innovation focused categories private the niche brand and us the on where us the any

private So in share we continue to versus well do label.

Linda Bolton Weiser

oral mass perhaps, to morning need in I I you don’t there? saw of care acquisition, this you trying bigger? more I then, that successful But terms if Paragon think Or look for saw have know be that to is oral be the an wondering the I’m look maybe at build an critical you would oral if in at and know category if been And regard deal business, wouldn’t DenTek, large something announced category of it. don’t you looked more a to of you able with sort care just to it care to like perhaps. up you

Ron Lombardi

announced today basis, under and space acquisition No, sub-category been DenTek of we pending forever. really against the in look that’s at the competing competitor it Paragon

this competitive we bunch - Flossers a of subsections, again, temporary tooth our Brushes or whether Interdental devices pain fillings leading And not number change has subcategories. a a physicians broken within dynamics care at DenTek that or And or for of down or of specialty So bruxism does it’s has those look number leading oral into us. brand the medication.

you’re Interdental not You know Dental so teeth if flossing, about Brushes thinking you’re grinding. worried about or pain tooth or bruxism,

manages consumer Linda. in the space, think we that how really that’s So,

Linda Bolton Weiser

just I you on increased us seeing sales, e-commerce small for you Okay. ‘XX? FY And versus what on then And you FY percentage update your growth guys, of know it’s, how kind e-commerce rate can finally, percentage Thanks. and but has of you ‘XX in are then know business? your relatively that

Ron Lombardi

Yes.

is and total So our fiscal now our e-commerce grew ‘XX, XX% about in business of X% revenue.

So, it’s to performance. meaningfully our additive

which them. so strategy their the head investment online Amazon trusted level available, and have be media of available years there is, of as numbers, of partners, well. are at when our number of in shows where the brick-and-mortar initiatives products were fairly simple, You for our out there started that lot has consumer ago there, e-commerce increasing know curve, up get been kind not brands a in And but all ways, of good to and of only at the we making our right we a

to to going and way. something it’s the invest So on we’re focus right continue

Linda Bolton Weiser

very Thanks much. Okay.

Ron Lombardi

Thank you, Linda.

Operator

Our Instructions] [Operator Frank with you question comes Sidoti. next from Camma Thank

Your line is open.

Frank Camma

guys. morning Good

Ron Lombardi

Hey, Frank.

Frank Camma

couldn’t it see brands. of really, Just you it, or at a around core I about total I this don’t Can the you ones. quick portfolio One point? you the couple to explain help some change Is talk it? the the more at least in is, growth just presentation don’t noticing focus like on that messaging why

Ron Lombardi

a of Yes, give end at ability do and to today and on categories that ourselves to.. brands our versus is the we year, way to categories, doing, grade each our an important kind were terms looking outgrow just wanted that performance which annual forward Frank, give in, how going the we’re on our compete scorecard scorecard something of to of biggest the we it’s in

Frank Camma

brands. mean really actually I be drives your what growth right, you, core honest way, it’s To prefer just that it with earnings, of I your not

that. know, actually So, appreciate I I

share you not policy, to a really obviously but capital allocation even if but talk sort is one it’s you a and your it surprising other haven’t little so address that a term. your while seems, interest repurchases, longer debt given, it drive it’s, ton, savings and you in still reduction know down going a mean highly not to debt I nice you you and is levered, The you just surprise. million a is want are $XX comment changed it of it, about

just money you’d have give don’t a the that. know fact you debt, if I that So, use guess multiple where expanded equity would say, why would get address to know more pay an is to know that shares probably, you you continue market the to you outstanding. can my down I not despite level

Ron Lombardi

Sure.

we’re You year have at, of can $XXX you level in our ‘XX that today industry out we cash did of Frank. worth is buying to million our more, at down of more return $XX and a the and million over think paying or flow with last to know, deleveraging right know in it from of accelerate we our and the shareholders, value us leaves do the thing well to stock it, we got was fiscal one there number or do million things benefits a back for by still and shareholders leading a when we that it it’s XX% free ‘XX expect our seeing that $XXX similar is and received continue debt,

move doesn’t our it out So derail or meaningfully deleveraging.

proceeds million swap. matter You from shareholders. positioned took business $XX-plus think fiscal We the to you know returned a divestitures, poor of our net a household ‘XX, allocation and in it declining about could meaningfully fact, capital a in

that shareholders the continue using we the So, of, down is $XX got about and to debt to we million the returning usage way pay million balance it, $XXX right have the think is million balance. right to and that’s to we $XXX think

Frank Camma

Fair Thanks. enough.

Ron Lombardi

Sure. Thank you Frank.

Operator

Thank you.

Morgan. Carla Our J.P. next with Casella question comes from

is Your open. line

Carla Casella

to refinance just about credit I’m I - answered. ask potential going my were the the Actually, questions sorry, to was Bonds. the

Ron Lombardi

Good Carla. morning,

Christine Sacco

Chris. is this Carla, Hey

for around So capital obviously, always opportunities our structure. we’re looking

refinanced, As in, were into more to EPS neutral. to our March some debt refi we loan put it make fixed and high the term able last think yield I notes

look when opportunities. take we marketplace. We’ll those in advantage So, for them the of they’re

notes one on we December. a have know you think, I this [inaudible] that of ends

capital as go continue we entire we’ll the forward. evaluate to So, structure

Carla Casella

Great. you. Thank

Ron Lombardi

Thank Carla. you,

Operator

showing at time. this turn I’m over to no questions further And remarks. back Lombardi Ron like the closing to you. for I’d call Thank

Ron Lombardi

In long-term through to great good to business trends coming financial X-pillar day. you brand we speaking all with with ability of Thank growing approach profile free you, shareholder We top the the to flow a feel and and Thank strategy value. of operator. the consistent our months. strong in maintaining strategy a cash closing, capital execute of about disciplined executing building, the have line enhance and you, continuing in fiscal ‘XX, our allocation forward this look and our

Operator

conference. this day. Have Thanks and participation. Ladies gentlemen, a wonderful concludes for today’s your

Prestige Consumer Healthcare (PBH) 12 May 192019 Q4 Earnings call transcript