PBH - Earnings call transcript Q3 2020 | Prestige Consumer Healthcare Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Ladies and gentlemen, thank you for standing by. And welcome to the Prestige Consumer Healthcare Third Quarter 2020 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 session. [Operator Instructions] Please be advised that today’s conference is being recorded. Instructions] [Operator

like Director conference go of now today, your ahead, hand Terpolilli, Phil Investor to would to the speaker sir. I Relations. Please

Philip Terpolilli

has operator. us you, And morning everyone Thank good today. who to joined

CEO call cover on presentation, with that quarter, me discuss XXXX take On Lombardi, President then our On from the and There and which we questions visiting accompanies results slide clicking are Sacco, will link call Christine today’s call, third highlights and our the be Ron year the outlook Chairman, full and prestigeconsumerhealthcare.com, can and is the analysts. by today‘s today’s fiscal accessed Investors CFO. a presentation. on and webcast then of

non-GAAP measures Please and presentation. between remember some included the are contained of release includes measures. reported financial adjusted information and financial in today’s today in earnings Reconciliations slide presentation the

management our slide statements Further uncertainties in risk cautionary we are detailed and call filings forward-looking Page factors recent and our XX-K. information During available of SEC risks safe on today, recent statements the most most around and call. which which disclosure accompanies company’s X complete will a concerning make in harbor presentation, the

walk hand quarter. to Ron now through fiscal CEO, I’ll the the Ron? Lombardi over of to highlights it third

Ron Lombardi

versus in Thanks, which of expectations offered revenue approximately Phil. pleased are prior were Starting of was October. our And results, on the good QX slightly year basis top line and $XXX up morning, with outlined was X. QX the everyone. back an We ahead in with on organic Slide million

prior to X% approximately in year. was compared consumption Importantly, portfolio for our the up QX,

level, around of ongoing brand success investments. our to the We full continue for the consumption to year attributable to building long-term be expect this trends

in in performance year-to-date adjusting FX. gains Net from of and led as XX% more in into detail strong our summer. strong approximately experienced results strong the International later after discuss on. We’ll growth by headed The QX consumption for was Australia country our International performance sales which segment, positioning benefited

our In sales by skin throat North at net care categories. weakness America, previously were sore ongoing impacting in incident women’s strength shelves portfolio. reductions, in offset our levels and by This retailer cough and inventory in discussed changes continued GI and strength care oral health cold led was

on adjusted to company in in that Adjusted gross at consistent with XX year Chris related came is of margin points a an XX%, the logistics Total third-party ahead gross quarter the new provider costs update our will later. margin and transition performance. to year-to-date excludes basis prior provide

approximately flow was $XX financial year. Adjusted drove QX versus of our $X.XX which free leading strong prior in up XX% The the performance million. of consistent was EPS driven cash by profile, and

industry-leading Our flow used rate. our which drive QX reduce cash cash continues efficient debt, cash will to margins, to value flow the from shareholders. EBITDA continue low our We allocation to tax future and enables capital for model business that benefit in optionality

Now, to let’s year-to-date Slide X highlights. review our to turn

by organically drug anticipated revenue occurring of and in was year through offset was million growth versus strong of flat the X% inventory nine the essentially Our $XXX months consumption channel. largely approximately prior reductions largely

good feel our our of in environment. value with to continue We to ability the leading create brands and this positioning

year Cleaning business. of a ago Household divested X% EPS contribution was year with $X.XX prior adjusted $X.XX up of Year-to-date the versus the approximately from including

flow resulted repurchases EPS reduction a in and year-to-date. This in in free benefited million year-to-date. $XXX million financial cash share flow from stable also $XX generated opportunistic enabled cash $XXX a of debt million about profile that

full EPS us for to about raise outlook good performance feel of has the we year. execution the and our summary, three-pillar the strategy, which year-to-date business of proven our In our enabled

Slide of solid International the drivers discuss year-to-date segment. the Let’s results, X our and now of turn to one

makes up sales of have Fess that in and experienced three well business left the XXXX. on concentrated our over As of we Pharma acquired there, It’s see eye highly sales. you impressive Murine from Hydralyte, can about our primarily with International Care of we which XX% Australia, International side nasal growth slide, positioned XX% it falls care. sprays since banner in has brands under This the the all

and and Our includes sold Eve throughout Southeast products well International business also our as other Summer’s as largest Asia geographies, including certain brand, Fleet others.

these scalable small acquisition DenTek, brands over markets that We which Europe, can Chloraseptic infrastructure we with Murine UK the support Care. Each as the also has Hydralyte have the in time under by business brands. and in a is Ultra concentrated added a of saw

expect would our more we grow Similar share X% great well-positioned leading to can time. category target. term, well this year to above over by North a both having at the business are fiscal we long is ‘XX, the on our and focusing and we’re total or winning America, International grow that brands Over in and that

Australia Let’s review growth. drives recent segment our excellent example X, It’s our strategy our driver fastest brand-building big brand on largest in and is that a term success. International of growing brand Hydralyte. Slide to long an Hydralyte

with this ‘XX in share, excess for Hydralyte of to drive continues its brand of one over the total category number long term XX%. strategy, year-to-date Hydralyte growing XX% sales execution Australians, in category. with our market The hydration representing synonymous of growth oral is fiscal solid Even with

through exercise diarrhea hydration last and oral vomiting usage extending five other exhaustion, expanding heat many by and occasions into messaging, occasions. from sports the over targeted We’ve years redefined and

effort spend, traditional with ad We’ve TV including to development tactics distribution. media marketing this and expanding digital various new from product expanded ongoing up backed

penetration to and Going for for awareness forward, Hydralyte brand. runway the increase by continued we see driving continuing growth household of

parts country relief communities the the for for the engaged for we’ve With serve our with Australia. those our to impacted do the across help back Finally, affected donations and efforts. other to employees and give ways looking by that that, the are services been a of and to we with It’s bushfires large communities have and to consumers like tragedy same. local to encourage express we our constantly we’d we concerns

over turn to walk to financials. it detailed now to Chris QX through like I’d

Christine Sacco

Thank updated expectations I’ll context some walk through detail morning, fiscal our and ‘XX. you, Ron. Good offer financial third quarter around results greater everyone. our in for

the information in results our in reconciled reminder, release. measure that the are adjusted earnings GAAP closest a today’s includes presentation As to

On results, revenue well third approximate an high and respectively increase which included Slide you point level our as as versus XX of [ph] quarter XX% about an organic EPS year. million, the can X.X growth to EBITDA see to $XXX prior to

comparisons year, $X.XX year. as were Year-to-date, impacted a while this Cleaning, in QX of Both Household declined which prior was slightly divestiture the the we fully adjusted nearly EBITDA per up of reminder, of share results X%. EPS versus by of lapped

turn bit results. detail a let’s for Slide around to XX Now consolidated more

excludes As impact I fiscal to of revenues increased currency. ‘XX mentioned XX foreign on the prior slide, points million, third which basis $XXX.X quarter the net

growth revenues as year-to-date slightly up consumption of anticipated million channel. with of organic results reductions $XXX.X the Both on drug retailer basis an QX and Year-to-date prior the primarily inventory were versus impact were the the offsetting year. in

transition Adjusted with margin, quarter, provider points logistics the which gross new and for prior sequentially. third was associated our up excludes flat year XX% costs basis versus the XX

as level term building XX% revenue in at in A&P, year-to-date second we anticipate in In long brand half spend our expected. a to behind in and QX of investments of came We continued we brands. drive terms success with the lower XX.X% of core

slightly of nine months, revenues in dollars first around in X% Our G&A total year-over-year. was up spending the

share debt representing of in increase Finally, the by earnings of repurchases. the we QX adjusted reported year, $X.XX, prior of and down versus driven per share an primarily XX% effects pay

the of to under of effects For interest and net $XX reduction million, the attributable rate. expense full year, just we lower interest now anticipate debt

cash quarter Now our let’s turn to Slide XX third flow. to discuss

QX, we $XX For in million approximately reduction. went free debt primarily cash flow, generated which to

Our leverage leverage of by times. of of net our approximately X.X still year anticipate debt We QX equating was $X.X to at the a fiscal end. X.X end ratio billion, times

to on our and we capital With in maintain deployment reduction, focus relationships community. and and flows, strong the cash ratings debt disciplined leading debt credit continue consistent

result, we ‘XX. interest were maturity in due key prior fiscal savings able a issue of which and replaced both extended of notes resulted December, senior million. in transaction As debt $X to The annual that in new notes about $XXX million were a

Last, I’d expect million in QX one-time incur one-time to still the on to of incurred this related million for to an logistics costs provider. our new We $XX update cost like and we transition project. project third-party to approximately provide $X.X a in

and have January, we half on first the transitioned track warehouse Through in complete transition more are to than the fiscal new to ‘XX. revenues of of the our quarter

turn it back remarks. ‘XX Ron I’ll our now an outlook on some update and fiscal to closing for

Ron Lombardi

Thanks, Chris.

Slide on XX. Let’s wrap up now

year, XX, consumption we cash now and flow a sales for achieve trends line our higher of EPS flow. by growth strong and for all original level fiscal to driven are organic in expectations cash anticipate solid and the For

to to of margin trended for drive to the year, original end in note reinvest levels the fiscal our enabled A&P. I’d to higher long of has gross of is margin, also growth gross over our in of of reinvestment time. ‘XX This has which levels us term A&P with higher investing sales objective consistent our expectations higher savings like

still the revenue fiscal organic approximately we expect sales, prior ‘XX year. be net For versus to flat

down strong year. organic the QX, to year be from comping For performance expected ago revenues organically are slightly we prior a are as versus a

range the For EPS, to EPS we up strong ‘XX anticipate of performance. from fiscal to QX $X.XX in the by $X.XX, now adjusted driven $X.XX, $X.XX

to of free expect $XXX or outlook flow adjusted we cash Our million flow and continue more. is unchanged full cash year

our business across strategy, remain and our growth and confident recap, outlook we we To look prospects. as in

trends direct focus building. Our our top driven by line solid long are continues result a on that brand of to be term consumption

date efforts. we value efforts our these we all end cash stakeholders. total, continue allocation and financial efficient of Strong In fiscal enable well-positioned our focused to consistent driving of and and remain on leave our flows approach capital the us for metrics to year as

turn questions. like operator the for With that, I’d to over it to

Operator

[Operator William you. Jon Instructions] first Andersen Our from with comes Blair. question Thank

Your line is now open.

Jon Andersen

everybody. morning, questions. for Good Thanks Hey. the

Ron Lombardi

morning, Good Jon.

Jon Andersen

organic expectations? you now that. Maybe Is think signs either any an quarters? on with in let start. growth of to very destocking Just trying I’m up there on has the would solid right - front? has there next seeing where to talk any portfolio or what in several been - X% about it soon over at line for the you’re than consumption of much come Okay, since your somewhat helpful. the update be the Are update Can and less kind an

Ron Lombardi

Sure. Okay.

they taking factors so response have reductions year-to-date and retailers we trends business what do the - So seen of largely have seen haven’t again, challenges the in that businesses, and the the are to at we’ve been in in that terms destocking, anticipated change that to with their them line And the in year. causing any the of for that. are at beginning we objectives Jon, inventory are far

as channel, to reductions the drug in on give anticipate we difficult update I although medium fiscal May said. drag talk predict, We’ll still just term, further in a our inventory this So when in ‘XX. particularly a we be about to the

likely with successful well But to it be in consumers just thought, consumption in so the has to far, be importantly, line what environment. continues But as continue. to in us the to winning with continue this we positioned

Jon Andersen

Sure.

to bit and a some that will have of Maybe performed well it the some in which around platforms helpful. color a that’s maybe be the fell Okay, short. some more helpful me of quarter bit little to - the

you So changes maybe and and and as shelf sales. care growth in then skin care GI out areas adversely women’s called impacting some health as oral

whether bit the more when then happening areas? other there GI lap of in - - some you’re in the issues two and on talk level might skin seeing a shelf brand what Thanks. little we the any is care positive you that’s Can and maybe

Ron Lombardi

Sure.

of continues in to well. Dramamine So GI, terms do

grow back continue way all that’s category brand the That’s there in recent good been trend. the Canada a in having We has since and happening had a a performance acquired while. for XXXX. particularly year up and Gaviscon, the good we not to is

couple share. W over hope Compound a of couple new have products that care, skin the brand last continue grow, to that of terms to grow of In had years helped at I them continue has

the are well. are those brands doing So that

seen of as from we changes and at expect those as the headwinds Monistat, businesses result will And at of year, a year-over-year the those fiscal we’ve we retailers in fiscal and that least down number we number some DenTek offered. perspective, they get begin to SKUs a the of year-over-year terms to had moderate of beginning into and make a ‘XX, businesses, In stabilize. those

good about began into heading feel we to ‘XX. those So businesses

growing well it’s that think to also nearly Eve do I note Summer’s important to X%. continues

So pretty the women’s concentrated the health much in in Monistat. decline category is

Jon Andersen

the about do know this story you Really and as aspect talk as look, you like at great. On such it That’s on on helpful. could But you’re $XXX fiscal more cash commenting - than looks we the track flow moment. you’re to key I the the a of fiscal year. generation, XXXX not conversion know, high million

we maintain think that you to helpful. some drop-off, should any How look that of be XXXX? about given we schedules? Is - amortization strength? as the fiscal as look there That Do we would

Christine Sacco

is No. This Jon. Chris. Hey,

you see very flow As cash is historical can our very from board. profile stable across results, our financial the consistent,

And coming flow. free it cash in [ph] so events there relates no cliff ‘XX to is major as fiscal

So I it with what year. would consistent expect remain this you’re to seeing

Jon Andersen

are other can that DenTek of? Great. that And Monistat that I and you adjustments, suspect anything various varies there of you go can we that shelf to resets through all know, then about or year the line fiscal or But you by of it any should dealt last at you just with comment be retailers. know think category. maybe reviews distribution, Thanks. don’t question. timing related maybe there this aware the I and what - potentially and i.e., – on - retailer wins

Ron Lombardi

Yeah. for in The our we about QX expect and majority feel we give year shelf May. update of this next of QX we’ll of kind year. at a the further good happened And point, fiscal and in changes what in our

Jon Andersen

lot. a Thanks quarter. the Okay. Congrats good on

Ron Lombardi

Thanks, Jon.

Operator

Thank you.

Our Sturdivant. from question comes Pinheiro with next Mitch

now is open. line Your

Mitch Pinheiro

me? Hey, hear good Can morning. you

Ron Lombardi

We can, Mitch.

Mitch Pinheiro

you. sometimes. Thank button had Okay, with I great. the trouble mute

– your it you Just talking maybe to forecast. you’re want longer just way. where but, a in mean, that getting know words questions, of - I but seems put seems I of to tail the originally back mouth, to than I than destocking one issue, Jon’s have don’t do and about tired think

Where item - up this adjust back a end? when one I time think they in mean, on shelf you with do ends? does this stock this when end will or nothing this or no having the up like on is

Ron Lombardi

who not say over - be longer billion $X.X in bit ago drug first announced It’s one year a year it’s would we I it a have more, the would program large lasting save increasing to I’ll retailer or to of anticipated. all, than seems point three costs. a little to

first time going a period is is to long over out play the thing. anticipated. we It this had as So of

perform So when their their to in recover businesses stops. will line with and they this when start be objectives

performing well is businesses good in the our us for Now news that that channel. brands our and are

drug the channel about Our is X%. consumption in year-to-date

part So of we’re not their problem.

of around. the of We’re solution businesses part them turning their

Our sell-in impacting is meaningfully our a which and creating sales. is big gap down

So of And them ways the that’s the with whether centers, or at distribution we’ve supply not efficient first store, in it’s shelf it’s their have chain, better and good more rates ways we’ve whether which again, closing to getting at fill seen underperforming being them for part. the overall. closing them reducing them number which SKUs that to the finding be looking able they in it’s seen do lower do, inventory stores, have it’s just

So seeing. we’re that’s what

Mitch Pinheiro

have talked which or and channels when this, - which And any besides may going growth, channel is obviously which consumption you but strong expected have Thank is about to? to a which may - have missed are expected are weaker Anything than Okay. that than this, e-commerce, but there showing growth? the then look stronger you. obviously you I

Ron Lombardi

Yeah.

both high of are at performing other, online, that. very levels growth retailers.com Amazon So very and the well,

to tends channel be X%, us As there. the so for long over term. well a I performing is Convenience just drug that’s mentioned, good

little again, changing. been that’s the due year, SKU the this to a has and Mass Monistat bit impact for DenTek to us of just some and slower

as change year. So next we expect that get we into to

seeing. an I what of a of outline that’s think So little we’re bit

Mitch Pinheiro

just be earnings here, guess and done have my share fourth correctly? the that just the guidance, Is Okay. may wrong an I I going on the - on but final is that am math quarter flattish And I to based question then saying basis. per

Christine Sacco

Yeah, range, the the flat of Mitch. it’s year-over-year. At midpoint about

Mitch Pinheiro

just... So

Christine Sacco

a the a remember tough calling comp down, for about facing Sorry, versus we to we’re line right, top slightly year. think be prior as

Mitch Pinheiro

Right.

Christine Sacco

on a QX. GAAP in FX And continued headwinds then, basis,

Mitch Pinheiro

was - at going fourth similar there up Is G&A. dropped the little was should… of curious then in How I’m we a thing year-over-year. are - level G&A other It see And G&A sort of just to obviously looking a higher the Okay. The sequentially. quarter?

Christine Sacco

Yeah.

level QX our quarter when you vary QX. highest a with looks I QX. is it the drop So QX similar typically Remember, anticipate timing But with QX to of in QX can line off, saw initiatives. in

Mitch Pinheiro

Okay. All I right. Well, have. that’s all Thank you.

Ron Lombardi

Mitch. you, Thank

Operator

you. Thank

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

open. now is line Your

Linda Bolton Weiser

margin. if But you term changing on much all. was expansion are high know long just wondering the EBITDA I’m question. that I always the term. Hi. my That’s first is you’ve viewpoint expect that and curious said about your long don’t at over Thanks. that I viewpoint margins

Ron Lombardi

guess, of mid margin XXs long so right [ph] very is thing first time in XX% period is for feel that Yeah, term XX%, what the a I EBITDA long we’ve we with our objectives. growth the managing said is balance

gross as as look them gains out remarks levels margin So prepared gains we in called the we P&L, of A&P, invest higher I or to get in today. in my other will

Linda Bolton Weiser

And curious reductions SKU Mass. the Okay. just I about was given Monistat, then at

if are having brand, you front out, been the And new that brand leading in the SKUs you have anything leader of something of recently? on the there? about can innovation just focusing a you Thanks. innovation Is the there, You products few you’re have come talk that new on terms done the innovator. things, the

Ron Lombardi

Sure.

lots shrink in with nothing every a help SKU to at deal year. over different them something bring are expand know, for make They is grow Retailers category, retail of reasons. sales new to changes new. or something It’s You changes that we time. looking

flow things So these and time. ebb over

where to it we and campaigns over other connect continue term with ways consumer, to to have with the time. to we Monistat, playbook of grow digital connect look consumer terms So in the long a

Linda Bolton Weiser

the thanks just of your International I all overview is of didn’t through International for distributors? finally, business. what if you catch of said, but Okay. And percentage done

Christine Sacco

through is Linda. all distributors, Almost of it done

Linda Bolton Weiser

much. thank Great, very you okay. Oh,

Ron Lombardi

Thank you, Linda.

Operator

Instructions] with you. Thank open. is [Operator Raymond now Our comes Joe next Altobello from James, your question line

Unidentified Analyst

there for destocking, rate - fiscal destocking we guys. it expect but and shipments differ actually helpful. as roughly were of is any to same impact on at don’t would the belabor kind on I you Adam would to ‘XX, you ahead of the be Joe would Hi, look want to look as just or color This continue kind curious or you

Ron Lombardi

tough It’s go that meaningful seen I the to to causing which the had haven’t to is any earlier, And in comments predict. we again these I’ll changes retailers back actions. the are factors take

this we’ll we would to anticipate at So realized to And, year level be again, given in we’ve May this the point, what an update similar that. fairly on next year.

Unidentified Analyst

Thanks, then to Perfect. two And wanted ask just I Ron. That’s helpful. smaller questions.

mention have little again, mentioned year? end you how bit alluded of nine through And months the that fiscal the sales year-to-date and in total the still reach here? of also in past to earlier. fiscal the up is to expect guys channel goal X% could business, But these by much online you a of guys terms just you the do You

capital I additional there was then there. just obviously just allocation, But curious, And revisiting on anything is are if you you. debt. curious Thank guys centered

Christine Sacco

experiencing you this to yes, for Adam, anticipate doing? Chris. double-digits year. How we we far the online still exit this high the the that us X% is approaching grow year, is and as we’re thus to online, answer continues are So

flow priority at for here capital of the of number - But we QX, sit a our pay always our we Obviously, allocation expect potential for go point this down looking will or as share cash From today, reduction QX. to we’re our to repurchase. free all debt be in perspective QX. at debt opportunistically one in allocation debt all

Unidentified Analyst

Chris. That’s me. Awesome. all Thanks, from

Operator

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

Ron Lombardi

a year look operator, May you results. and speaking thank forward end Have We with Okay. us joining day. for to good everyone Thanks, you again for today’s on call. in our to

Operator

this gentlemen, participating. today’s and you Ladies call. Thank concludes for conference

disconnect.+ now may You

Prestige Consumer Healthcare (PBH) 6 Feb 202020 Q3 Earnings call transcript