PBH - Earnings call 2 2024 | Prestige Consumer Healthcare Inc.

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Operator

Good day, and thank you for standing by. Welcome to the Q2 2024 Prestige Consumer Healthcare Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Philip Terpolilli. Please go ahead.

Philip Terpolilli

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

filings cautionary impact and and Ron Lombardi. most statements as on recent the are our harbor of that it CEO, events at review uncertainty information other Lombardi, results and link of the the me President the in forward-looking contained by risk due information and potential of on over On our safe On chain business numerous which X then make are and statements environment the fiscal will then the we'll high detailed factors now today's A year best disclosure hand with earnings available accessed forecasted from remains most presentation some available Page Investors presentation. concerning our call. These complete Ron well financial as results, nearest change constraints CFO. On second to means our discuss company information and the call, our 'XX call, take review release and supply measures contemplate in impacts. Sacco, today's various are webcast to is today considerations the estimate Reconciliations Ron? call any be geopolitical inflation, the outlook could a presentation. Remember time, around non-GAAP Christine clicking accompanies important to are SEC and recent today's accompanies This in Chairman, visiting financial full can risk and to includes based quarter included prestigeconsumerhealthcare.com, and risks XX-K. date. on presentation presentation and and in management today's uncertainties I'll analysts. questions heightened today's slide of our slide Further on as our slide measures. CEO; the GAAP are and call

Ron Lombardi

Thanks, Phil.

X. Slide on begin Let's

ahead a of highest on back record we a quarter, Net performance were anticipated in and aligned history second from August. year our sales the prior given slightly were and largely sales Our with QX strong company to $XXX We of this level the QX million quarterly we expectations built results. faced the results challenging pleased second what comparison were in results. which in

up year-over-year Our private diversity mostly Revenue million X% sales business while offsetting strength be versus continues leverage. EBITDA gross prior certain translated the sequential margin. as brands strategic down to as in the we flow. label pay generated portfolio earnings and Xx comparison cash previously earnings, we've the well a tough in business discussed. and international of and free into with debt, of We quarter as the $XX experiencing as this to at exit $X.XX finished U.S. flow our and strong consistent margin year cash in well Strong enabled improvement a in strong

We assessing strategic will continue opportunities. deployment to reduce while other capital debt

strategy. business So earnings, proven forecast, in are achieve the revenue year, on and year to the our full to execution of we halfway delivering track thanks summary, through strong our

our Now Page to that's let's building brand discuss of to driving success. turn X example one

with while We've on-the-go Goody's attract taste. Most distinct new we and new existing as with from X and went marketing flavors leveraged After that Our done form these the Goody's We offerings of targeted ones. recently, great increased consumers of history brand usage acquiring other and we use elements, the long Southeastern the headache work to drive with in consumers treat XX solve ways. release expanded to connections deepening pain distinct highly successful Hangover with helping leveraging largely powders and brand. to over have with United define as customers a well forms ago, years products headaches these this XXX-plus-year in like States. the learnings designed

we've consumers for brand that First, emphasizing driven visibility. has wide-ranging of media, important count concept day the the make had

brand-building Thursday national night the recent successful successfully interest leveraging exposure drive and get fiscal marketing brands had increased In grown Xx retailers share the over we've Goody's football tactics Second, and headache category. faster the our ads to the to where consumers are in results online. These tool kit clear. on than are good driving analgesic with overall powders Goody's we've are marketing year-to-date,

channels brand-building Slide to consumers. important to Alongside turn is update aligning these let's investments Now an emphasis efforts e-commerce. for with on that in our X are

As shift, readily example continues to be available key our E-commerce wherever of and shop. to the this. is habit consumer be end to they shopping prominent goal consumers

consumption the we've we year. Equally that achieved e-commerce the left As half strong our first the shown of side growth page, of of profit all and across important with performance profile. consistent is X% on in fiscal experienced a strong partners the

with success right consumers. Two the on and Our assortment the recent broad page. shown of product is are strategies, targeted effectively including connect making better examples by side our to with driven content, our managing e-commerce partners effective of investments each

the learning overall experience story a an On the specific brand there few examples of about help user are shopping of while top, brand upgrade product. which online a for pages, actively

and is of investments seek solutions around health of ultimately their purchases care a reminder content. each for bottom, We brands help our online to content the for as drive continually On refresh needs. traffic consumers

online well we consumers are summary, and investments our across further digital for through in positioned and advertising growth. with continue content So e-commerce in

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

Christine Sacco

Thanks, Ron. morning, Good everyone.

X financial and to results. quarter second our Slide fiscal review 'XX turn Let's

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

basis after expected the foreign and of currency. million $XXX.X were effects excluding the points from QX year prior revenue as XX decreased of largely

expectations. the long-term X.X% our margin increased of earlier, private X.X QX year about prior to in X.X%, headwind exit also difficult largely remained consistent faced to both spend. year, A&M in and most of to the and timing from highlighted includes respectively, EPS the quarter the strategic a label attributable QX prior Ron with and comparison EBITDA EBITA As the the related business. the

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

For revenues versus International segment eye declines and declined FX, the the of drivers By approximately the months women's growth increased care in the North prior dermatological first revenues X.X% $XXX first were segment, million. America, In year. North strong sales, helped were flat ear and offset half while fiscal category America 'XX, X at largest in the excluding segment partially which health.

long-term Our segment our slightly International above brands. performed performance across strong thanks numerous expectations, to

Ron and mid-single-digit experience owing prior This highlighted. partially and X cost increases, to to offset year-over-year the margin savings QX. months channel, in amount year, attributable of We we company offset versus inflationary of pricing was across actions continue in cost Total e-commerce the by gross comparisons the as XX.X% slightly challenging in margin gross was to portfolio, cost down which our growth expected dollar solid headwinds. first as the

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

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

still the were rate For sales fiscal sales prior A&M of X.X% dollars anticipate year. months, we XX% and G&A versus in XX% the in just in prior over of 'XX, consistent first with year, QX. X expenses up of of approximately an spend with

versus of increases Finally, $X.XX diluted EPS impact a higher cost despite and rates. to the was interest slightly timing $X.XX up headwind related of

QX. approximately For million, $XX expense interest the we still in 'XX, with balance anticipate expense lower of fiscal an of sequential interest

anticipate tax remaining QX of for XX% we tax quarters rate 'XX. and our was of Finally, a rate approximately still XX.X%, fiscal the

to and Now cash turn flow. Slide let's XX discuss

the of the the For free million timing prior cash due year generated $XXX.X mid-single working digits first to half, versus we in flow, down capital.

year below We of we Xx. by other being is We continue free year-end, that, strategic flow flow. over achieved with industry-leading maintaining uses more. At to the targeting term. a and Xx our below leverage leverage $XXX fiscal net the XX, is billion, back Xx cash or debt of which Ron. of operate absent to billion covenant-defined full still long was $X objective ratio I'll are and turn anticipate With This outlook maintain consistent September of it for cash to of leverage approximately our fixed $X.X million our

Ron Lombardi

Thanks, Chris.

leading wrap to through business thanks than up. have year, we More and Let's halfway our health portfolio. Slide to turn strategy consumer the to momentum, business proven XX solid care

portfolio our thanks diverse full are brands. year outlook, We to our reaffirming of

anticipate fiscal business. billion revenue revenues and X% and of X% growth growth to versus X% continue of to the of X% $X.XXX to organic to of fiscal excluding 'XX, after private revenue organic $X.XXX label billion, exit approximately noncore we For or 'XX the

QX, For year-over-year expectation. with anticipate million increase a the we year revenue consistent full of growth $XXX

of is potential this QX the order typically quarter the difficult given year of most and As the holiday to period. our during patterns season retailer forecast the a lumpiness fiscal reminder,

thanks range, full flow. year, continue to to to anticipate our $X.XX and of end diluted we power at EPS of EPS, of the likely the higher most the For the cash $X.XX for

the $X.XX, anticipate For prior year. versus QX, of we EPS slightly up

still we Xx Operator? Lastly, free we execute of cash flow fiscal to expect for questions. deployment and to anticipate open up continue capital strategy. being we our more, million With continue as below leverage year-end I'll that, disciplined it $XXX by or

Operator

the first Parikh from Our comes Instructions] Oppenheimer. [Operator question Rupesh of line with

Rupesh Parikh

guess kick with just to wanted Women's the I I So off Health it segment.

you're give Just the in recovery. curious thinking just if terms about of can us how you color

you health. the curious year thinking year, I latest it later think expected women's improve just but to earlier on this

Ron Lombardi

I think is about category quarterly slowing the down. the last call, talked on as we

focus in products We've We it. on Summer's continue later Eve to to positioning. feel good the and new about year, continue the got we some expected

to feel into about year. expect good things in turn next to continue the So and positioning year, brand's the early later

Rupesh Parikh

branded just the private on even other label curious if changes players. competition then any seeing front, or And from competitive Great. you're

Ron Lombardi

that's No. No entrance disrupting in or Rupesh. real new anything, share change

kind point. of it's just at category trends So the overall this

Rupesh Parikh

I we've And of bankruptcy Great. Aid. Rite the then guess, seen, all

what's if the given shift challenges dynamics changing So channel. just just as happening pharmacy consumer the channels, any with well seeing in and some between you're just curious of

Christine Sacco

it's Hey, Chris.

all, result the concerning outlook we're to specifically, year Rite as full anticipating disruption a first So filing. our of a not Aid of

for customers well share generally For mainly of we're right? perspective. online from We're is our seen about, as shift one not is we've That they're top have brick-and-mortar. channel-agnostic into And generally we said, XX and us, talked globally. Our positioned, higher in right? channel gross but a margin e-commerce, positive it mass some than context,

say products So our to we wherever to we they want available always be shop. consumers

shift wouldn't we meaningfully channel so anticipate impacting us. And a

Operator

Susan from of line with comes Anderson question Canaccord. the This

Susan Anderson

It your sounds I on driver out job it talk Nice you the there. I like commentary a cough could some been of mix cold season. wondering guess sales. about was there's if the quarter. maybe

you've play out out modeling or you're you to how Just expect and seen season. the how it for curious it start how it

Ron Lombardi

season talking really of X been the since beginning cold us, factors it's for the we've for consider year. So and cough the about to kind been of consistent

expanded business, our for is last capacity first we've got versus The year.

more ship get supply So because can from chain. more we we're able the to

season the second what The and hand inventory considered planning impact on is how cold. third level. is or change of changes retailers the the that cough cold keep incident the the may for And we've level in then, of course, are cough they

today, street we So for what as sit line up with factors here continue the to we thought year. those about

are year the last we to cold year. line anticipating So with cough be for in

level our likely supply better an outside this anticipated for is stocking traditional cold the offset by it's year, cough So season. levels lower incident as and lower of of

viewing at how we're that's So point. this it

Susan Anderson

about forward? Okay. talk dynamic unit And could the about the there And Great. past, look I know expect you That's normalizing do feel helpful. pricing growth. to and you between half, back how the about be as go growth And as talked guess, then would into we then you volumes in quarter maybe more in you the dynamic? if we equal the then that I

Christine Sacco

Yes.

exactly from certain in of benefiting pricing right. actions half that We're largely year. this roll will still second over that's So the

expect to an was first Right? organic in to So talk with totality. price. original price, slightly be half anticipate that therefore, about probably consistent by and basis, second our growth that In we largely half guide, for still year. on were the We and we volume to easier the reverse, half driven up half, our

Susan Anderson

of just at that, you the Great. forward. you're year? beyond then thinking we then Xx balancing you reaching if could about so I allocation. the I also are by are guess, look thinking about I repurchases Okay. and how your leverage, goal and maybe how more one capital add end debt M&A opportunities almost paydown And guess, share on the as

Ron Lombardi

dividend. there, a X, and M&A shares is leverage March. we'll then that our really, which each year evaluate longer continue stock target than been as it's buyback the to different up, we'll is consider at offset a term, any at last next come anticipating and way no there the phase, of that But we'll Susan, dilution is years, for it's So to again, look which getting opportunities few of end below get

we to capital forward. the going continue feel that about So have optionality good allocation we

Operator

with from Jon the of line Andersen comes question William Blair. This

Jon Andersen

year. but the the means full sales the to X% year, we're sales in see half for year you've flat, your going essentially acceleration which outlook in X% During to the first talk an of growth, half? growth of to reaffirmed some expect second of what about and basis you second a drivers expecting half of your are that that you're improvement Could the on the the to visibility year-over-year in underlying that

Ron Lombardi

level first So we as I I'll quarter in the with is in is sales prepared quarterly history. comped start place Jon of company's ever remarks for comps. And the second mentioned today the highest during particular, the the

comp. last catch the that funny in return As still supply a of were up number normal other year ramp-up a factors reminder, kind in last year, of and a kind activities we chain drove in and to of

we the That's of the level big think, help drive to normal of to as we into comp get our half to, return gains. year-over-year of a factor. I So year, begin second more really

Jon Andersen

Okay. Is trend affect where I could they standpoint in comment guess, you're to a to to thinking year response inventory changes in last inventory retailers' less specific kind considering is hold And are cold chain broader on you as might -- levels, And factors that retailers just that planned in question than the cough less aggregate? looking cold a with mentioned, this shipments? from one or normalizing things inventory on the year. there of hold your your there of that supply Ron, cough now

Ron Lombardi

Yes.

year, of many to chain were last trying up. for right, cold, supply suppliers cough cold the particularly cough So catch

carry incident last levels because of supply right, year trying the they much happening So uncertainty as long. that year, then were And retailers inventory to as are as could in all chain. importantly, cough/cold just

we rather And level inventory into to level we're a seasonal. this So I to get the seasonal historical incident and peaks that a year-round return as starting of to carrying retailers were cold support different signs year, valleys. than think see

really a retailers by it's held levels. different the inventory than profile So lower rather

right, lower lot businesses the so right. you you impacted thinking levels fine our yes, then, by subsections of we're see other If hearing that of our companies about from CPG And Not and are in of their much things specifically are carrying retailers difference there. the being our same categories a categories, inventory.

the expect would think, I really point, outlook -- impact our major the levels we for no we So forward. expect that at and would year, this is going supporting

Jon Andersen

kind of from couple such dynamic. largely, of due which could we you've like margin was I margins a on Last one gross improvement for On to, helpful. years ongoing That's some of after that think, seasonal? feel are bit first just margin, price/cost restore starting -- to some was traction Or I see margin early sequentially. that Are gross the I improved, gross solely think, the here? to you I of me. your guess gross little of Okay. is, are a question seeing signs got And is that erosion, that efforts guess, the you

Christine Sacco

it's Chris. Jon,

Gross -- quarter approximate in QX coming we said this in right? for be to latter. year calling the And slightly. should gave compared margin outlook expected still as to the we're really QX, the to QX, May. in flat So up we

for So a us freight magnitude costs it's marginal a you're percent more sequentially we the our range. on costs, talked of in from just are that hearing mid-single-digit certain sales the little that freight see bit starting like some to people, given as but about we've relief logistics of

cost-saving to to levels. seeing march reason continue some we we're a off. there pay efforts to to of little and starting can't more think recovery are normalized back bit our So of No

Jon Andersen

more goal? then one leverage, me, guess maybe does that. I kind willingness achieve capital -- excuse then limit maybe I on engage you on to hadn't M&A to missed term. I on in comments -- heard as in the is Xx that squeeze in long to And before. I that of work below that new your wanting term operate Is And fairly will that

Ron Lombardi

Yes.

new I Prior start right? that. that I something May the phase, fiscal Jon, were that call or X.X% on that, we think and to like was announced of between it at our So X% year we back think the the

M&A focus it's lower period I if it us opportunity of really at would of So job shows up [indiscernible] is think, that at an operating terms for doesn't over X% our levels really, optionality. on we compelling our done time. a the of it It to cost sense. just think made how for in leverage reemphasizing out get figure is above it shareholders we to rise time and And

at going emphasize a importance to it's feeling operating lower things, just on the but leverage put levels meant So of not of forward. rather

Operator

One question [ from comes Kim ] the This our question. line for last Tony Morningstar. moment of with

Unknown Analyst

a on quarter. solid Congrats

innovation talked the it's Dramamine shares to in quarters. identified of You an And guys about in example. priorities and key win have space great as category product as over few nausea launching the one your that been that see

so guess, kind other brands can do a you that of product portfolio, or with? category do your what And view thing looking which I at other you similar

Ron Lombardi

Yes.

for thanks question. the So

the that Eve Sky talk ago, drop the Sky launched years launched last category years. largest better over brand. our to Sky, SKUs products of the couple we selling where It's brands rose few don't So quickly from it element really we our the posted time over product in refreshments is long-term you've an products innovation of look And broad seen how building. important and to yes, if across brands, innovation that offering and and development the new of like marketing Summer's to where we've new think at a about and you product brand within Everything new spa we we've a portfolio. about one

partners. across driver categories growing not and retail it's sales, of a for the share only in an but big So portfolio important is our the element

building of brand forward, that see up going show across element you'll our to portfolio. continue long-term So

Unknown Analyst

is That's did the large Great. less the ] of as you of think spin pharmas Do Or expect And kind playing feel be J&J same their year next out [ by to this and usual? more the as with [ or do division, helpful. you pressures kind more Sanofi more ] same in Ken industry? thing year. you'll competitive as consumer it landscape

Ron Lombardi

things and more health expect big would big company are same companies to embedded a in care [ big it categories, part Helion [ different big Kemvi regions global which seen their CPG compete these focused move-the-needle lately. brands, be we whether looking like We different that consumer independent in ] are on we've ] opportunities They're for They're or we objectives. than business of are. Yes. the of as

So we're successful be that going and look focus opportunities. on bigger niche further those opportunities those to categories brands that the to continue to in may categories can as smaller acquire shed can on we likely we'll they define focus for they

So the nothing to case new there. That's XX the for XX years. last been

So more of the same.

Unknown Analyst

question last one just And me. helpful. for That's it. Got

cracking Or feel the and across pills With threats the we FDA about? there are drops, do decongestion be portfolio? as products down categories, any pretty on about oral strongly should that eye thinking your different such maybe you

Ron Lombardi

Yes.

do starting we the what right? consumer for sell We is that quality point it. here, the So a deliver quality of everything delivers out need against to expects and product

a been importance just on. and long eye announcements there. from something necessarily the of of it continue of to start the proven The recalls suppliers focus sourced outside North term that reminder we that aren't that So care is America just of and around sterile have recent products we over

Operator

questions Ron for remarks. no time. I'm I would like CEO, closing to now it further back President turn this and you. at to Lombardi, showing Thank

Ron Lombardi

joined look and us to you call. quarterly Have next to Thank we operator, great who's on a and day. thanks updating our you, today, forward call on the everyone

Operator

conclude now does the may and you This disconnect. you. program, Thank

Prestige Consumer Healthcare (PBH) 2 Nov 232024 Q2 Earnings call transcript