Earnings call transcript Q1 2024

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Operator

Good day and thank you for standing by. Welcome to the Q1 2024 Prestige Consumer Healthcare, Inc. Earnings Conference Call.

At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. advised conference be being Please Instructions] that is today's recorded. [Operator

Treasury. the now VP to and like would conference of go to Relations Terpolilli, I Phil hand over ahead. today, your Investor Please speaker

Phil Terpolilli

and operator, today. thank who's everyone Thanks, joined to you

are with year questions CFO. and XXXX our Lombardi, our today's results, quarter outlook fiscal call, take we'll discuss On CEO; me Chairman, analysts. Christine full and and the then from Ron call first our Sacco, On President review our

can and call on today's accessed accompanies by and clicking that presentation slide prestigeconsumerhealthcare.com, be the then visiting A on presentation. link Investors today's webcast

Please presentation. remember to today the information release included in Reconciliations includes financial GAAP this earnings measures are some presentation of the nearest in measures. slide non-GAAP our financial our contained and

forward-looking Page environment contemplate. Two call. impacts. the accompanies supply which chain call, risks in These to constraints, will have around high are detailed inflation, are that and heightened today's and potential of on complete Business which management safe disclosure important uncertainty to the a numerous remains make statements due slide presentation harbor uncertainties, On review

This considerations any date. estimate the the time, on means of based is as information the available best impact of could results today's change forecasted at risk and

statements Additional company filings our and concerning XX-K. are most factors information and most risk cautionary recent in available recent SEC

now I'll Lombardi. Ron hand it over CEO, to Ron? our

Ron Lombardi

Thanks, Phil.

five. begin Slide Let's on

in leading continued our QX, we the with sales as May. back results, year our in $XXX net with to QX We million of to slightly pleased start solid are what across brands of our achieved anticipated We thanks ahead momentum portfolio. delivered

solid X.X% flow. performance sales These a as broad that margin we to cash more with strong benefit touch from attributes free on EBITDA shortly. translated growth, portfolio continue including This drove and earnings long-term from and strong into to sales brand-building These our generating performance detail in profitability profile, I'll operate Dramamine robust continued efforts. organic solid continues

financial thanks margin, $XX capital and In our repurchase emphasis improvement that program to share to in still leverage against saving on We measures effective experienced thanks to enabled our gross are the we cost stable to actions times, deploy our also X.X continued reducing completed million sequential profile The us pricing debt quarter, inflation. reduction. first while efficiently. cost

look let's growth, do In healthcare time-tested by We highlight success our needs building to Page of leveraging to Now ever-evolving turn and double-digit efforts. the brand. solid where Dramamine driven is Six revenue success long of meet a more the this Dramamine we to consumer to on in experienced find QX, opportunities detail. that history by brand-building insights grow

the to categories key grow multifaceted. are Just time a tested. consistent into like to brand-building with consumer of These using insights, innovation tactics numerous on strategies over is the numerous all of ability tactics our and time include grow objective based Dramamine's operating brands, pipeline adjacent marketing consumers brand that

For to the early great with consumers' brand new help and ownership, in and launching match needs. we example, flavors successful flavored nondrowsy our highly forms less drowsy, offerings days of expanded

addressing the began nausea the Dramamine More becoming offerings, recently, nausea distinctive the quickly in and work brand even with insight we market our category. further developed new #X

expansive our These of focus. successful, underpinning thanks brand-building the were long-term items to

solve them arise. the Ditch sickness and has campaigns Shown motion incidences engaged treat recognizable this Dramamine for. the our this year, that Drama with benefits they a features Drama campaign Llama right, reminding highly Dramamine, that lower can For in included of to the marketing consumers, the only brand nausea memorable of whenever

and help XXXX the This use grow takeaway grown rate our time with category brands all We've clear. shown across we and a achieving our are expand of here. a retailers. strategy to of 'XX for playbook results the campaign our the is fiscal since leading share XX% growth compounded proven brand around The annual

Now to Seven update on Nix. let's for turn Slide an

Nix brand offering caretakers. time, expanded of consumers lice head their Our which have over gradually Nix another of breadth with building. their with connection treatments brand has example is helped deepen

looking of help that ensure only Our of From lice, new offering for consumers products insight the and future the meet that this, treatment set for for to were but their of consumer. to not prevention we products the work work developing uncovered occurrences. removal needs

of kit includes recently that Nix Treat that Today, a Prevent is great head most offers spectrum off and efficacious Nix start. a products the to lice

offerings Nix to on set that these brand Dramamine, marketing with effective category the capitalize up through levels. are well As incident supported

sales in to pre-COVID achieving well right, As head leading level, and lice levels. expanded well above in category season has shown is to brand the position lice as its share the normalized pre-COVID #X the QX more is head above market returning gradually at

So both of Dramamine are portfolio our results. brand that across we and building to in summary, examples continue timely financial to Nix our drive execute

pass to it the Chris Now to I'll walk through financials.

Christine Sacco

Thanks, everyone. Good Ron. morning,

'XX Let's our review financial turn results. to Nine fiscal Slide first quarter and

certain today's information closest our to release. is includes reminder, a in in non-GAAP information the that measure the As reconciled earnings GAAP presentation

increased year QX excluding revenue of XXX the points basis $XXX.X million the increased effects points, and basis of versus XX prior foreign currency.

EPS and year, declined the slightly both QX in but from EBITDA long-term with margin consistent prior EBITDA expected, expectations. our remained As

results. Let's to Slide for detail turn XX more consolidated around

versus X.X% just prior X.X% increased FX, and QX I the By increased increased organically prior segment America highlighted, excluding year. segment revenues North versus fiscal International the X.X% our year. As segment, revenues 'XX

were in Dramamine, solid discussed from largest The Ron QX category earlier. including performance GI which growth skin and care, drivers

channel, to also higher in e-commerce experience purchasing. the online long-term growth continue We of the trend year-over-year continuing

attributable points by pricing across our margin year's but as declined increases, Total company basis we This was savings expected offset in offset of inflationary which dollar headwinds. partially the to of and actions the gross XX.X% gross increased and cost margin last cost difficult comparison. cost portfolio, amount quarter first versus sequentially XXX

versus year, For with 'XX, continue QX slightly full to to to up flat margin gross similar to the be we QX. estimated anticipate fiscal

for XX% came As the at sales, advertising first quarter. of in fiscal a percent marketing and

expenses. of an G&A over of versus dollars decline year year. For We of prior to year. in versus anticipate full up certain dollars still sales due fiscal anticipate 'XX, still in sales the of we were A&M slightly X.X% and to the XX% expenses prior the just rate G&A timing QX

Finally, diluted interest down $X.XX higher compared EPS cost year, of rates. in the increases prior and the from to $X.XX of impact

fiscal of anticipate 'XX, remainder to interest in the a the half. QX lower For expense we by interest expense followed similar second QX,

approximately of We quarters the our tax XX.X% items. affected of of for rate timing remaining certain fiscal XX% tax 'XX. rate Finally, a QX by the was anticipate of tax discrete

timing and million versus to down Now let's working XX $XX.X discuss turn cash free to the of cash capital. In in flow, year we due the generated Slide QX, flow. prior

free which our maintaining XX, the covenant-defined billion, by below for industry-leading leverage three fiscal a year. fixed, maintain we achieved to flow was of year-end. cash still times. billion times of anticipate full being our continue debt are and leverage ratio $X and is $X.X We net We approximately outlook June At X.X

in shares Lastly, approximately repurchased the share we for quarter, program. completing million, $XX XXX,XXX authorized the repurchase previously

back With I'll turn that, Ron. it to

Ron Lombardi

Chris. Thanks,

to turn up. Slide Let's XX wrap to

business momentum, and fiscal to year continues have good Our is our solid a off start. to

leading outlook, healthcare We thanks are reaffirming our portfolio. full to consumer our diverse year and

of label billion the that business to May versus anticipate on 'XX, revenue continue fiscal of growth growth strategic X% excluding to to we exit fiscal our and X% discussed organic billion X% revenue organic For revenue earnings X% to of after noncore USDX.XXX USDX.XXX private call. planned or approximately 'XX we of

of private slightly million, largely approximately the continued and anticipate of the we $XXX QX, For down prior revenue from currency to due headwinds year exit label.

For EPS continue of for year. the EPS, to full anticipate we diluted USDX.XX USDX.XX to

digits versus high anticipate single we up of of timing the to the $X.XX, EPS QX, spend. For due year prior marketing

cash flow free below as deployment We to $XXX continue still Lastly, leverage of or our continue disciplined execute more. fiscal year-end anticipate strategy. we X.X expect times to being capital million by we

for it up open questions. I'll that, Operator? With

Operator

Thank Please the question-and-answer first conduct [Operator this question line with time, proceed with comes Canaccord question. Susan At you. the your Instructions] we session. Genuity. Our of Anderson from will

Susan Anderson

Good in you costs wondering talk quarter. throughout take price then the and flow and you the expect through are later dynamic the about if the year? with Hi. normalize to also, year? for Nice if more in finally chance units show to starting see you to pricing could I the margins And between to that morning. was

Christine Sacco

Susan, this is Chris.

X 'XX from point and about full price X fiscal talked of So contemplating year about growth we our volume. from guide point

flat. the was growth Volume the For of the priced. of essentially majority pricing majority The was QX, last year. executed was

gradually price So as year will of reduce the benefit the the progresses.

terms largely be inflation, coming of as inflation, think going In inflation, our about in it's expected, wage If it's pretty consistent. you right? to largely

It certain sequentially P&L. costs see we're freight. that as for take such through beginning the to So some does work time relief some on to

digits reminder, to And for talk as low freight the a us. being in about mid-single we

might So others. of probably an big hear impact not you going some have to as from as

as largely in we're inflation margin, expecting to to gross come for obviously, follow. year the and So expected

Susan Anderson

that Hydralyte could is in how And ask going can if than in forward? quarter. then maybe the guess, also, should Great. the business about international really that then was expected? overcome? think it weaker the we it FX just growth impact Okay. about And Or I just I

Ron Lombardi

Susan, Ron It's Good here. morning,

to of anticipated business, feel returning full kind international levels up is the deliver historic that excluding mid-single the the slightly, So our back growth to year. for line business in for of year. outlook that is FX, to and continue was year for the we digits, as largely Again, international the for

Susan Anderson

feel levels benefit at add could kind they're maybe guess, retail. then still of like to Or on Okay. you one Great. restocking? I normal? just if are from do could I that guys categories And there one inventory back last

Christine Sacco

consistent supply the last chain of the retail has for been pretty as last the caught So quarters at level Susan, of our handful inventory up the most year. part, products over

levels no we here. restocking the monitor meaningful that this a pretty for it's of basis on be area weekly and consistent. to something So Again, year benefit seem

Susan Anderson

Okay. Great. the of year. much. luck Good so the Thanks rest

Ron Lombardi

Susan. you, Thank

Operator

& proceed question Parikh next from Oppenheimer Rupesh question. from Co. Our with Please comes your

Rupesh Parikh

Good on questions quarter. for my the and congrats morning. Thanks taking

of how you on category update us women's you that the terms So think just for in health, balance about of can the if year? just

Ron Lombardi

So and women's I get back in will think we in growth. back position as stabilize business we're to May, that our long-term anticipating begin for a health stated

year-over-year we women's continuing continued the for to in slowdown decline During the category. health, due the quarter, a largely to see

Both retail, But about in And those of for with are a businesses good providing later and continue this longer-term planned hit we new to launches year. Summer's more. significant of feel our to brands, them for have product positioning about leadership the they share Eve categories talk we'll growth. continue when those Monistat #X and

Rupesh Parikh

the quarter, up cold incident past category, And I and levels are down cough held Great. know this but sales well. your then in pretty

just cough the now year I channel? thoughts that guess, And in as of curious, category balance and for inventory just on cold the the any how So is well?

Christine Sacco

Yes. Rupesh, this Chris. is

in year of was from cough May. this in thought reflective for around cold terms issued cold. We're the seasonality we what really of normalized and cough expecting retailers QX more back guide we a So trends

also the peak And from some seen expecting already of and southern we've down year, incidences to hemisphere. we're be the levels in last that

to, at have that as improvements supply of serve we the kind benefit chain is you this the So of level. in to year, our our fill bit a alluded will retailer continuous pipe

a in cold of single reminder, line. cough digits a top to our a mid- our as is of But high the not meaningful percent business driver as

Rupesh Parikh

And Great. just maybe Okay. then one question. final

different are at of channel have pharmacy If And for one, the trouble there's file to of shifts I seeing of they your channels, and note? you to, in could or be related anything some change then any speculation know bankruptcy. you one just look

destocking based risk inventory in you there on of Just that any terms thoughts see any visibility? from your out

Ron Lombardi

Yes.

there. questions few a guess I So

First of for see on value we've some all, propositions. I begun terms as in movement this shift, to different shoppers touched think of past look in in maybe price quarters, channel and they we've

channel’s want up catch The product be with successful. offering benefit where no is consumer choose all us across of retail matter with we partners a shop. We they our all broadly for to the to distributed

and see go So we the them up end they is where catch back first just part. and of kind stand where they

our customer In terms It significant been of screen to, for radar not alluding the you're for retailer is it's a drug us. while. on a

in inventory on our for we'll we in anticipate to at having that or any at But kind result meaningful retail continue something change of any business it's impact it point, this us. monitor. So wouldn't

Rupesh Parikh

Great. you. pass Thank it I'll along.

Operator

next Andersen Jon Our with proceed with question from Blair. William Please your comes question.

Jon Andersen

just start business Thanks. question Good the little than like sales. X% the of quarter around X%, up less for in to a about the The first on I guess easier I'll a what looks morning, comps one with out be was year. everybody.

like the sounds also some of but And just expectations, it think move wondering, through your as growth it acceleration perhaps make implies the revenue you the I balance year.

year. X% might from, the know of thinking or for I here? acceleration it's drive marketing some be way that modest And or or and we right perspective seeing the And guidance hit what both are about that from to to innovation planning if don't the X% kind you

Christine Sacco

Jon, this is Chris.

quarter. headwind just you're so we first FX X% X first up Remember, So on in a were right, the quarter, basis. the in contributed organic for under quarter point almost the point of an

the confidence in continue to for we'll anything different than and communicated May. headwinds What slight will into gives We're QX, the back part. most back not us It half. then We're the half. what in FX have some tailwind in first going see a we seeing

Looking dollar year. comparable. basis, Sequentially, quarter-to-quarter less 'XX in absolute expecting than numbers at the more prior 'XX fluctuation fiscal from an we're are in fiscal the

the FX rates piece comps for it's growth this the So really the look you when at year. and that

Jon Andersen

Was to sequentially, sequential quarter is guess, forward? improved That's expect good helpful. sequential was then improvement, see the it gross Should which to what asking, was steady or kind Okay. And see. more of going as mix seasonal we the I I'm driven? improvement in you mentioned, margin,

margin Or during on here pricing to sequential is string permanent other cost through something more gross coming of improvements a there with could catching quarters? with lead going that productivity flowing up commodities,

Christine Sacco

Jon.

cost the purchased So year quarter, through America North primarily we're in of our you're of in upside mix the savings. expected, as gross and the to highest the product extent, first as QX, margin year. was largely the some that usually Remember, prior right, selling in was flow

quarters, we outer as look So the to

of QX. about being I'm sequencing expecting QX. a talked pretty from to consistent similar We off QX

put the this being for year of new we place. cost-saving point, your be inflation that So by to that offset the into impact efforts will

So we're pretty consistent margin the throughout expecting be gross of year. this to rest

Jon Andersen

called strength another or Nix in Were to mentioned to when Okay. strength. trying GI dermatologic just understand talked you driving of there? And some category referring And maybe you a the quite that was kind area then think, about category you already. the bit Skin care, out strength. Dramamine what's you or I'm I of platform?

Ron Lombardi

good benefited W both from skin Jon, and Compound Nix quarter. the in performance, during

Jon Andersen

leverage bit, a Okay. last, to quite share it down the repo And with mentioned. you then as come even down continues ratio the has come

kind use If or down your end levels historically free year, pretty how some the for are you three of the fiscal as low on ratio around excess comes to of three cash Prestige? reach of thoughts is the by evolving priorities what

Ron Lombardi

Yes.

to, below to in thoughtful continuing first priority even our debt, tad business reduce Jon, three, and when up continuing forward, opportunities. and bit capacity if even foremost, see and we be M&A continue going us don't disciplined and So future invest I end below our a and to building in changing around look capital brand building where allocation to get we then three we'll and

Operator

with line next of Co. the Pinheiro Sturdivant Mitchell Our comes proceed with Please from & your question. question

Mitchell Pinheiro

advertising were questions of my Most have and one but I and asked answered, on did marketing.

Is advertising year-over-year would due I'm was last and focus it year down in on marketing your marketing. to is your focus this mix and advertising channel versus to product where any curious there year? or just And So be timing. change

Ron Lombardi

really to is opportunity where to marketing resources advertising is. the investments approach move our and So our and

product plan year, opportunities, every what's on change as on then we and based So put evaluate launches a and together needed. going new and

that we to got some continue Nix. lot big way. products behind So in same get Dramamine there, well, a doing with of a success are new We've

terms or the in approach change the opportunity real of no products new are. So in investing where

Mitchell Pinheiro

is sure from advertising media. where Has it is it years? we with meaning changed other are I'm circulars, mean, at And talking is, all channel, media, in-store prior not talking we today? I focus, if are spend your this Where

Ron Lombardi

Yes.

again, brand, search, TV, been but investments dot-com search, is mix the it's couple particular, different last the in And by fairly of it's right? digital, brand the Over in consistent. years,

had Amazon to We quarter dot-com of quarter, up XX% with great another during total or and digits quarter. grew I for revenue the our think, business the over we're double XX% and

So again, investment growth getting we're the posting is. where opportunity the we're where and

change. So no real

Operator

from Lebiedzinski from comes question next Our Instructions] & [Operator Company. Anthony Sidoti

Unidentified Analyst

Stefan Hello. [ph] changes first private is My you have question seen label Gill notable Anthony for competition? This Lebiedzinski. is any on from

Christine Sacco

So label. any changes no, seen meaningful we private on haven't

even levels, speaking, majority label. look we Over the pre-COVID private generally term, categories, share the been of our long over gaining we've back

true the true We So categories seems saw to consumers holding that found be that when and crisis back trusted today. held we go throughout these in to happened. COVID the brands it financial

long we've period gain So time, of over a hold able been label. or to over private share

Unidentified Analyst

your solid have additional Given flow, share cash an do you appetite buybacks? for

Christine Sacco

Yes.

as pay have, look M&A. offset to invest to we We'll it we'll do. flow So dilution. to the program in continue to priorities essentially as we always and be in mindful at But space our buyback down in terms to continue the right obviously, Ron the share are brands serves now, mentioned, cash debt, continue, of

Operator

this the Lombardi to Ron questions would I'm no conference like turn to showing time. further closing at remarks. for back I now

Ron Lombardi

you, thank I us and forward Have look joining to updating on a to our this like operator, quarter. you great Thank next I'd day. business everybody for morning, and

Operator

your you the today's Thank in does participation conference. program. This for conclude

disconnect. now may You

Prestige Consumer Healthcare (PBH) 3 Aug 232024 Q1 Earnings call transcript