Financial Data and Key Metrics Changes - Net sales for Q3 2024 were $283 million, an increase of nearly 3% compared to the previous year, exceeding expectations [7] - EPS for Q3 was $1.06, up 2% year-over-year, contributing to robust free cash flow of approximately $70 million [9][21] - Year-to-date revenues reached $848.4 million, up 80 basis points, with a 1.2% growth excluding foreign exchange effects [22] Business Line Data and Key Metrics Changes - North American OTC segment revenues were flat year-over-year, with growth in Eye and Ear Care offset by declines in Women's Health and the exit from the private label business [19][23] - International OTC segment revenues increased approximately 20% year-over-year, driven by strong performance from the Hydralyte brand [20][22] Market Data and Key Metrics Changes - The e-commerce channel experienced high single-digit growth year-to-date, now representing about 15% of total sales [64] - The cough and cold category accounts for about 7% of revenue, with Q4 expected to be in line with last year's levels [39] Company Strategy and Development Direction - The company anticipates full-year revenues of $1.135 billion to $1.140 billion, with organic revenue growth of approximately 1% to 2% [32] - The long-term growth strategy aims for 2% to 3% organic growth annually, supported by strong cash flows and potential M&A opportunities [34][36] Management's Comments on Operating Environment and Future Outlook - Management noted heightened business environment uncertainty due to inflation, geopolitical events, and supply chain constraints [6] - The company remains confident in its ability to create shareholder value through cash flow generation and lower leverage [68][90] Other Important Information - The company achieved a leverage ratio of 2.9 times, aligning with its long-term objective of operating below 3 times [28][90] - Management highlighted the importance of maintaining differentiated products to compete against private labels [79] Q&A Session Summary Question: Expectations for the cough and cold category in Q4 - Management expects Q4 sales to be in line with last year's levels, as cough and cold represents about 7% of revenue [39] Question: Thoughts on Women's Health business recovery - Management anticipates recovery and stabilization for Women's Health brands, with expectations for growth next year [40] Question: Initial thoughts for FY '25 guidance - Management suggests starting with a growth expectation of 2% to 3% for top-line growth and mid-single-digit growth for the bottom line [41] Question: Flexibility to invest in the business - Management indicated increased optionality for capital deployment, including M&A and share buybacks, due to reduced leverage [47][68] Question: Performance across the portfolio - Management noted strong performance in Ear & Eye Care and International segments, while non-core brands may see declines [45] Question: Cost savings impact on gross margin - Management has begun to see benefits from cost savings, with gross margin expected to remain flat to slightly up for the year [56] Question: E-commerce performance - E-commerce grew high single digits in Q3, now accounting for about 15% of total sales [64] Question: Market share changes and competitive landscape - Management has not observed any significant share loss to private labels, emphasizing the importance of brand trust [65] Question: M&A strategy and criteria - Management maintains a consistent M&A strategy focused on leading brands with long-term growth potential [67] Question: Discussion on distribution channels - Management indicated that club channels are not a significant focus, while dollar stores have been a growing channel [73][78] Question: Impact of eye drop recalls - Management believes recalls in the eye care category may reinforce the importance of trusted brands like Clear Eyes and TheraTears [80]

leet ENSITIVE This presentation contains certain "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements regarding the Company's expected financial performance, including revenues, diluted EPS, leverage, free cash flow, and organic revenue growth; the Company's ability to execute on its brand-building strategy; the expected market share and consumption trends for the Company's brands; and the Company's ability to reduce debt and execute on ...

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements and detailed notes for periods ended December 31, 2023 and 2022 [Condensed Consolidated Statements of Income and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Three Months Ended December 31, 2023 vs. 2022 (in thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | Total Revenues | $282,741 | $275,524 | $7,217 | 2.6% | | Gross Profit | $157,938 | $150,402 | $7,536 | 5.0% | | Operating Income | $86,832 | $87,184 | $(352) | (0.4)% | | Net Income | $53,046 | $51,951 | $1,095 | 2.1% | | Basic EPS | $1.07 | $1.05 | $0.02 | 1.9% | | Diluted EPS | $1.06 | $1.04 | $0.02 | 1.9% | Nine Months Ended December 31, 2023 vs. 2022 (in thousands) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | Total Revenues | $848,366 | $841,856 | $6,510 | 0.8% | | Gross Profit | $472,631 | $471,530 | $1,101 | 0.2% | | Operating Income | $260,276 | $258,582 | $1,694 | 0.7% | | Net Income | $159,881 | $158,246 | $1,635 | 1.0% | | Basic EPS | $3.21 | $3.17 | $0.04 | 1.3% | | Diluted EPS | $3.19 | $3.14 | $0.05 | 1.6% | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Balance Sheet Highlights (in thousands) | Metric | December 31, 2023 | March 31, 2023 | Change ($) | Change (%) | | :--------------------------------- | :---------------- | :---------------- | :--------- | :--------- | | Total Assets | $3,339,753 | $3,353,729 | $(13,976) | (0.4)% | | Total Liabilities | $1,739,176 | $1,906,645 | $(167,469) | (8.8)% | | Total Stockholders' Equity | $1,600,577 | $1,447,084 | $153,493 | 10.6% | | Cash and Cash Equivalents | $63,615 | $58,489 | $5,126 | 8.8% | | Long-term debt, net | $1,199,340 | $1,345,788 | $(146,448) | (10.9)% | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Changes in Stockholders' Equity (Nine Months Ended December 31, 2023, in thousands) | Item | Amount | | :--------------------------------- | :------- | | Balances at March 31, 2023 | $1,447,084 | | Stock-based compensation | $10,283 | | Exercise of stock options | $10,818 | | Issuance of shares related to restricted stock | $0 | | Treasury share repurchases | $(30,524) | | Net income | $159,881 | | Comprehensive income | $3,035 | | Balances at December 31, 2023 | $1,600,577 | - Total Stockholders' Equity increased by **$153.5 million** from **$1,447.1 million** at March 31, 2023, to **$1,600.6 million** at December 31, 2023, primarily driven by net income and stock-based compensation, partially offset by treasury share repurchases[14](index=14&type=chunk)[18](index=18&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Cash Flow Summary (Nine Months Ended December 31, in thousands) | Activity | 2023 | 2022 | Change ($) | | :--------------------------------- | :------- | :------- | :--------- | | Net cash provided by operating activities | $182,019 | $170,729 | $11,290 | | Net cash used in investing activities | $(5,107) | $(5,226) | $119 | | Net cash used in financing activities | $(172,571) | $(105,351) | $(67,220) | | Effects of exchange rate changes | $785 | $(979) | $1,764 | | Increase in cash and cash equivalents | $5,126 | $59,173 | $(54,047) | | Cash and cash equivalents - end of period | $63,615 | $86,358 | $(22,743) | - Net cash provided by operating activities increased by **$11.3 million**, primarily due to decreased working capital. Net cash used in financing activities increased by **$67.2 million**, mainly due to higher net debt repayments, partially offset by a decrease in common stock repurchases[117](index=117&type=chunk)[119](index=119&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed disclosures for financial statements, covering business, accounting policies, and specific financial line items [1. Business and Basis of Presentation](index=11&type=section&id=Note%201.%20Business%20and%20Basis%20of%20Presentation) - Prestige Consumer Healthcare Inc. develops, manufactures, markets, sells, and distributes over-the-counter (OTC) healthcare products in North America, Australia, and other international markets, primarily through mass merchandisers, drug, food, dollar, convenience, club stores, and e-commerce channels[23](index=23&type=chunk) - The company operates in an economically volatile and uncertain environment, facing global supply chain constraints, rising interest rates, high inflation, and geopolitical events, which have led to changes in consumer purchasing patterns, including a shift to online[24](index=24&type=chunk)[25](index=25&type=chunk) - The company adopted ASU 2021-08 (Business Combinations) effective April 1, 2023, and transitioned from LIBOR to SOFR as its reference rate for credit facilities effective July 1, 2023, with no material impact on financial statements[28](index=28&type=chunk)[29](index=29&type=chunk) - New ASUs 2023-09 (Income Taxes) and 2023-07 (Segment Reporting) were issued in December and November 2023, respectively, and the company is currently evaluating their potential impact on future disclosures[30](index=30&type=chunk)[31](index=31&type=chunk) [2. Inventories](index=12&type=section&id=Note%202.%20Inventories) Inventories (in thousands) | Component | December 31, 2023 | March 31, 2023 | | :------------------------ | :---------------- | :---------------- | | Packaging and raw materials | $22,093 | $20,634 | | Work in process | $555 | $220 | | Finished goods | $125,989 | $141,267 | | **Total Inventories** | **$148,637** | **$162,121** | - Inventories decreased by **$13.5 million** from March 31, 2023, to December 31, 2023, primarily due to a reduction in finished goods[32](index=32&type=chunk) - Inventory values include a **$5.8 million** reduction for obsolete and slow-moving inventory at both December 31, 2023, and March 31, 2023[32](index=32&type=chunk) [3. Goodwill](index=13&type=section&id=Note%203.%20Goodwill) Goodwill by Segment (in thousands) | Segment | March 31, 2023 | FX Effects | December 31, 2023 | | :------------------------ | :--------------- | :--------- | :---------------- | | North American OTC Healthcare | $498,936 | $0 | $498,936 | | International OTC Healthcare | $28,617 | $325 | $28,942 | | **Consolidated Total** | **$527,553** | **$325** | **$527,878** | - Goodwill increased slightly by **$0.3 million** due to foreign currency exchange rates, primarily in the International OTC Healthcare segment[33](index=33&type=chunk) - No events indicating potential impairment of goodwill were identified as of December 31, 2023, following impairment charges of **$48.8 million** recorded in fiscal 2023[33](index=33&type=chunk) [4. Intangible Assets, net](index=13&type=section&id=Note%204.%20Intangible%20Assets,%20net) Intangible Assets, Net (in thousands) | Component | March 31, 2023 | FX Effects & Additions | December 31, 2023 | | :--------------------------------- | :--------------- | :--------------------- | :---------------- | | Indefinite Lived Trademarks | $2,168,902 | $1,223 | $2,170,125 | | Finite-Lived Trademarks and Customer Relationships (net) | $172,991 | $(14,587) | $158,404 | | **Total Intangible Assets, Net** | **$2,341,893** | **$(13,364)** | **$2,328,529** | - Amortization expense for finite-lived intangible assets was **$14.8 million** for the nine months ended December 31, 2023, a decrease from **$16.9 million** in the prior year period[34](index=34&type=chunk) - No events indicating potential impairment of intangible assets were identified as of December 31, 2023, following impairment charges of **$321.4 million** recorded in fiscal 2023[36](index=36&type=chunk) [5. Leases](index=15&type=section&id=Note%205.%20Leases) Total Net Lease Cost (in thousands) | Period | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | Three Months Ended December 31, | $16,831 | $17,089 | $(258) | (1.5)% | | Nine Months Ended December 31, | $54,926 | $50,864 | $4,062 | 8.0% | Weighted Average Lease Terms and Discount Rates (December 31, 2023) | Lease Type | Remaining Lease Term (years) | Discount Rate | | :--------------------------------- | :--------------------------- | :-------------- | | Operating leases | 2.95 | 3.80% | | Finance leases | 1.03 | 2.93% | [6. Other Accrued Liabilities](index=16&type=section&id=Note%206.%20Other%20Accrued%20Liabilities) Other Accrued Liabilities (in thousands) | Component | December 31, 2023 | March 31, 2023 | | :------------------------ | :---------------- | :---------------- | | Accrued marketing costs | $29,648 | $30,471 | | Accrued compensation costs | $9,940 | $14,292 | | Income taxes payable | $5,953 | $10,645 | | **Total Other Accrued Liabilities** | **$65,063** | **$72,524** | - Total other accrued liabilities decreased by **$7.5 million** from March 31, 2023, to December 31, 2023, primarily due to decreases in accrued compensation costs and income taxes payable[41](index=41&type=chunk) [7. Long-Term Debt](index=16&type=section&id=Note%207.%20Long-Term%20Debt) Long-Term Debt Composition (in thousands) | Debt Type | December 31, 2023 | March 31, 2023 | | :--------------------------------- | :---------------- | :---------------- | | 2021 Senior Notes (3.750%, due 2031) | $600,000 | $600,000 | | 2019 Senior Notes (5.125%, due 2028) | $400,000 | $400,000 | | 2012 Term B-5 Loans (SOFR + 2.00%, due 2028) | $210,000 | $360,000 | | **Total Long-Term Debt, net** | **$1,199,340** | **$1,345,788** | - Long-term debt, net, decreased by **$146.4 million** from March 31, 2023, to December 31, 2023, primarily due to a **$150 million** reduction in 2012 Term B-5 Loans[42](index=42&type=chunk) - The company amended its ABL Revolver (ABL Amendment No. 9) on December 8, 2023, increasing the commitment from **$175 million** to **$200 million** and extending the maturity to December 8, 2028, with no changes to interest terms[44](index=44&type=chunk) - All discontinued reference rates (LIBOR) for the ABL Revolver and Term Loan were transitioned to SOFR effective April 4, 2023, and July 1, 2023, respectively[43](index=43&type=chunk) [8. Fair Value Measurements](index=17&type=section&id=Note%208.%20Fair%20Value%20Measurements) Carrying Value vs. Fair Value of Debt (in thousands) | Debt Instrument | December 31, 2023 Carrying Value | December 31, 2023 Fair Value | March 31, 2023 Carrying Value | March 31, 2023 Fair Value | | :------------------------ | :------------------------------- | :----------------------------- | :------------------------------- | :----------------------------- | | 2019 Senior Notes | $400,000 | $391,000 | $400,000 | $383,500 | | 2021 Senior Notes | $600,000 | $523,500 | $600,000 | $510,750 | | 2012 Term B-5 Loans | $210,000 | $210,263 | $360,000 | $359,550 | - The fair values of the 2019 Senior Notes and 2021 Senior Notes were below their carrying values at both periods, while the 2012 Term B-5 Loans had fair values close to their carrying values[50](index=50&type=chunk) - All listed debt instruments are measured in Level 2 of the fair value hierarchy, indicating observable inputs other than quoted prices in active markets[49](index=49&type=chunk) [9. Stockholders' Equity](index=17&type=section&id=Note%209.%20Stockholders'%20Equity) - The company is authorized to issue **250 million** shares of common stock and **5 million** shares of preferred stock, with no preferred stock issued or outstanding[51](index=51&type=chunk) - No dividends have been declared or paid on common stock through December 31, 2023[52](index=52&type=chunk) - The Board of Directors authorized a **$25.0 million** common stock repurchase program through May 31, 2024, which was completed in the first quarter of fiscal 2024[53](index=53&type=chunk) Common Stock Repurchases (Nine Months Ended December 31, in thousands, except per share data) | Repurchase Type | 2023 Shares | 2023 Amount | 2022 Shares | 2022 Amount | | :--------------------------------- | :---------- | :---------- | :---------- | :---------- | | Employee restricted stock awards | 88,953 | $5.5 million | 99,522 | $5.5 million | | Share repurchase program | 426,479 | $25.0 million | 914,236 | $50.0 million | [10. Accumulated Other Comprehensive Loss](index=18&type=section&id=Note%2010.%20Accumulated%20Other%20Comprehensive%20Loss) Components of Accumulated Other Comprehensive Loss (in thousands) | Component | December 31, 2023 | March 31, 2023 | | :--------------------------------- | :---------------- | :---------------- | | Cumulative translation adjustment | $(29,245) | $(32,280) | | Unrecognized net gain on pension plans, net of tax | $716 | $716 | | **Total Accumulated Other Comprehensive Loss** | **$(28,529)** | **$(31,564)** | - Accumulated other comprehensive loss decreased by **$3.0 million** from March 31, 2023, to December 31, 2023, primarily due to a positive change in cumulative translation adjustment[55](index=55&type=chunk) [11. Earnings Per Share](index=19&type=section&id=Note%2011.%20Earnings%20Per%20Share) Earnings Per Share (Three Months Ended December 31) | Metric | 2023 | 2022 | | :--------------------------------- | :------- | :------- | | Net income (in thousands) | $53,046 | $51,951 | | Basic EPS | $1.07 | $1.05 | | Diluted EPS | $1.06 | $1.04 | | Weighted average shares outstanding (basic, in thousands) | 49,740 | 49,693 | | Weighted average shares outstanding (diluted, in thousands) | 50,125 | 50,186 | Earnings Per Share (Nine Months Ended December 31) | Metric | 2023 | 2022 | | :--------------------------------- | :------- | :------- | | Net income (in thousands) | $159,881 | $158,246 | | Basic EPS | $3.21 | $3.17 | | Diluted EPS | $3.19 | $3.14 | | Weighted average shares outstanding (basic, in thousands) | 49,731 | 49,919 | | Weighted average shares outstanding (diluted, in thousands) | 50,134 | 50,392 | - Diluted EPS increased by **$0.02** (1.9%) for the three months and **$0.05** (1.6%) for the nine months ended December 31, 2023, compared to the prior year periods[56](index=56&type=chunk) [12. Stock-Based Compensation](index=19&type=section&id=Note%2012.%20Stock-Based%20Compensation) Stock-Based Compensation Costs (in thousands) | Metric | 3 Months Ended Dec 31, 2023 | 3 Months Ended Dec 31, 2022 | 9 Months Ended Dec 31, 2023 | 9 Months Ended Dec 31, 2022 | | :--------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Pre-tax stock-based compensation costs | $2,449 | $2,433 | $10,283 | $9,756 | | Income tax benefit recognized | $241 | $49 | $910 | $924 | | Total fair value of options and RSUs vested | $0 | $63 | $12,213 | $10,352 | | Cash received from stock option exercise | $1,635 | $5,684 | $10,818 | $7,173 | | Tax benefits from RSU/option exercises | $351 | $731 | $1,490 | $3,626 | - Unrecognized compensation costs for unvested stock options were **$3.1 million** (weighted average period of **1.9 years**) and for unvested RSUs/PSUs were **$12.9 million** (weighted average period of **1.7 years**) as of December 31, 2023[59](index=59&type=chunk) RSU Activity (Nine Months Ended December 31) | Metric | 2023 Shares (in thousands) | 2023 Grant-Date Fair Value | 2022 Shares (in thousands) | 2022 Grant-Date Fair Value | | :--------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Unvested at March 31 | 409.0 | $47.17 | 440.9 | $38.45 | | Granted | 157.1 | $62.06 | 151.0 | $55.03 | | Vested | (205.0) | $43.17 | (223.4) | $32.09 | | Unvested at December 31 | 391.9 | $54.43 | 409.0 | $47.17 | Option Activity (Nine Months Ended December 31) | Metric | 2023 Shares (in thousands) | 2023 Exercise Price | 2022 Shares (in thousands) | 2022 Exercise Price | | :--------------------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Outstanding at March 31 | 1,081.0 | $43.96 | 1,100.9 | $40.62 | | Granted | 131.1 | $61.81 | 197.6 | $54.48 | | Exercised | (268.9) | $40.23 | (200.2) | $35.82 | | Outstanding at December 31 | 899.4 | $47.18 | 1,087.2 | $43.94 | [13. Income Taxes](index=21&type=section&id=Note%2013.%20Income%20Taxes) Effective Tax Rates | Period | 2023 | 2022 | Change (pp) | | :--------------------------------- | :------- | :------- | :---------- | | Three Months Ended December 31, | 23.8% | 23.7% | 0.1% | | Nine Months Ended December 31, | 23.4% | 23.0% | 0.4% | - The increase in effective tax rates for both periods was primarily due to discrete items related to stock-based compensation and state tax rate legislative changes[63](index=63&type=chunk) [14. Commitments and Contingencies](index=21&type=section&id=Note%2014.%20Commitments%20and%20Contingencies) - The company is involved in various legal matters and claims incidental to its business, which are regularly assessed for potential loss[64](index=64&type=chunk) - Management believes that reasonably possible losses from routine legal matters will not materially affect the financial statements[65](index=65&type=chunk) [15. Concentrations of Risk](index=22&type=section&id=Note%2015.%20Concentrations%20of%20Risk) - Revenues are concentrated in OTC Healthcare, with approximately **37.0%** (three months) and **37.8%** (nine months) of gross revenues derived from the top five selling brands in 2023[66](index=66&type=chunk) - Walmart accounted for approximately **19.0%** (three months) and **19.6%** (nine months) of gross revenues in 2023, while Amazon accounted for approximately **10.7%** (three months) and **10.4%** (nine months)[66](index=66&type=chunk) - The company relies on a single primary distribution center in Clayton, Indiana, and one manufacturing facility in Lynchburg, Virginia, for certain products, posing risks from natural disasters, labor shortages, or third-party disruptions[67](index=67&type=chunk) - The company relies on **129** third-party manufacturers, with long-term contracts covering **72.1%** of gross sales for the nine months ended December 31, 2023, highlighting a risk from manufacturers without long-term agreements[68](index=68&type=chunk) [16. Business Segments](index=22&type=section&id=Note%2016.%20Business%20Segments) - The company operates in two reportable segments: North American OTC Healthcare and International OTC Healthcare, with performance evaluated based on contribution margin (gross profit less advertising and marketing expenses)[69](index=69&type=chunk) Total Segment Revenues (Three Months Ended December 31, in thousands) | Segment | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | North American OTC Healthcare | $236,565 | $236,884 | $(319) | (0.1)% | | International OTC Healthcare | $46,176 | $38,640 | $7,536 | 19.5% | | **Consolidated Total** | **$282,741** | **$275,524** | **$7,217** | **2.6%** | Total Segment Revenues (Nine Months Ended December 31, in thousands) | Segment | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | North American OTC Healthcare | $727,131 | $731,456 | $(4,325) | (0.6)% | | International OTC Healthcare | $121,235 | $110,400 | $10,835 | 9.8% | | **Consolidated Total** | **$848,366** | **$841,856** | **$6,510** | **0.8%** | Segment Gross Profit (Three Months Ended December 31, in thousands) | Segment | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | North American OTC Healthcare | $130,475 | $126,330 | $4,145 | 3.3% | | International OTC Healthcare | $27,463 | $24,072 | $3,391 | 14.1% | | **Consolidated Total** | **$157,938** | **$150,402** | **$7,536** | **5.0%** | Segment Contribution Margin (Three Months Ended December 31, in thousands) | Segment | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | North American OTC Healthcare | $96,558 | $101,499 | $(4,941) | (4.9)% | | International OTC Healthcare | $21,914 | $18,480 | $3,434 | 18.6% | | **Consolidated Total** | **$118,472** | **$119,979** | **$(1,507)** | **(1.3)%** | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition, results of operations, key drivers, economic factors, liquidity, capital, and accounting policies [General](index=26&type=section&id=MD%26A%20-%20General) - Prestige Consumer Healthcare Inc. develops, manufactures, markets, sales, and distributes well-recognized, brand name, over-the-counter (OTC) healthcare products in North America, Australia, and other international markets[79](index=79&type=chunk) - The company's growth strategy involves organic brand development through new product lines, extensions, and advertising, as well as strategic acquisitions of 'non-core' OTC brands to reinvigorate them and increase market share[80](index=80&type=chunk) [Economic Environment](index=26&type=section&id=MD%26A%20-%20Economic%20Environment) - The company faces economic uncertainty due to global supply chain constraints, rising interest rates, high inflation, and geopolitical events, which are expected to continue impacting prices, supply, and product demand[81](index=81&type=chunk) - Consumer purchasing patterns have shifted, with reduced frequency of retail visits and increased online purchases[81](index=81&type=chunk) - While no material disruption has occurred to date, the volatile environment has impacted labor and raw material supply, leading to shortages, delays, backorders, and price increases from suppliers, which could materially affect operations and liquidity if conditions worsen[82](index=82&type=chunk) [Results of Operations: Three Months Ended December 31, 2023 vs. 2022](index=27&type=section&id=MD%26A%20-%20Results%20of%20Operations%3A%20Three%20Months%20Ended%20December%2031%2C%202023%20vs.%202022) Total revenues increased by **2.6%** to **$282.7 million**, driven by international growth, with gross profit up **5.0%** [Total Segment Revenues](index=27&type=section&id=MD%26A%20-%20Total%20Segment%20Revenues%20(Three%20Months)) Total Revenues (Three Months Ended December 31, in thousands) | Segment | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | North American OTC Healthcare | $236,565 | $236,884 | $(319) | (0.1)% | | International OTC Healthcare | $46,176 | $38,640 | $7,536 | 19.5% | | **Consolidated Total** | **$282,741** | **$275,524** | **$7,217** | **2.6%** | - North American OTC Healthcare revenues slightly decreased by **0.1%**, primarily due to declines in Cough & Cold and Oral Care, partially offset by growth in Eye & Ear Care (up **17.9%**)[85](index=85&type=chunk)[84](index=84&type=chunk) - International OTC Healthcare revenues significantly increased by **19.5%**, driven by strong growth in Gastrointestinal (up **22.4%**), Eye & Ear Care (up **25.6%**), and Women's Health (up **25.4%**)[86](index=86&type=chunk)[84](index=84&type=chunk) [Gross Profit](index=28&type=section&id=MD%26A%20-%20Gross%20Profit%20(Three%20Months)) Gross Profit (Three Months Ended December 31, in thousands) | Segment | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | North American OTC Healthcare | $130,475 | $126,330 | $4,145 | 3.3% | | International OTC Healthcare | $27,463 | $24,072 | $3,391 | 14.1% | | **Consolidated Total** | **$157,938** | **$150,402** | **$7,536** | **5.0%** | - Consolidated gross profit margin increased to **55.9%** in Q3 2023 from **54.6%** in Q3 2022[88](index=88&type=chunk) - North American OTC Healthcare gross profit margin increased to **55.2%** from **53.3%**, primarily due to reduced logistics costs[89](index=89&type=chunk) - International OTC Healthcare gross profit margin decreased to **59.5%** from **62.3%**, primarily due to increased supply chain costs and product mix[90](index=90&type=chunk) [Contribution Margin](index=28&type=section&id=MD%26A%20-%20Contribution%20Margin%20(Three%20Months)) Contribution Margin (Three Months Ended December 31, in thousands) | Segment | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | North American OTC Healthcare | $96,558 | $101,499 | $(4,941) | (4.9)% | | International OTC Healthcare | $21,914 | $18,480 | $3,434 | 18.6% | | **Consolidated Total** | **$118,472** | **$119,979** | **$(1,507)** | **(1.3)%** | - North American OTC Healthcare contribution margin decreased by **4.9%** and as a percentage of revenues decreased to **40.8%** from **42.8%**, mainly due to increased advertising and marketing spend[93](index=93&type=chunk) - International OTC Healthcare contribution margin increased by **18.6%** but as a percentage of revenues slightly decreased to **47.5%** from **47.8%**, primarily due to the decrease in gross profit margin[94](index=94&type=chunk) [General and Administrative](index=29&type=section&id=MD%26A%20-%20General%20and%20Administrative%20(Three%20Months)) - General and administrative expenses remained relatively flat at **$26.0 million** for the three months ended December 31, 2023, compared to **$26.5 million** in the prior year[95](index=95&type=chunk) [Depreciation and Amortization](index=29&type=section&id=MD%26A%20-%20Depreciation%20and%20Amortization%20(Three%20Months)) - Depreciation and amortization expenses decreased to **$5.6 million** for the three months ended December 31, 2023, from **$6.3 million** in the prior year, primarily due to lower amortization expense following impairment charges on finite-lived brands in fiscal 2023[96](index=96&type=chunk) [Interest Expense, Net](index=29&type=section&id=MD%26A%20-%20Interest%20Expense%2C%20Net%20(Three%20Months)) Interest Expense, Net (Three Months Ended December 31) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | Interest expense, net (in thousands) | $16,575 | $17,917 | $(1,342) | (7.5)% | | Average indebtedness (in billions) | $1.3 | $1.4 | $(0.1) | (7.1)% | | Average cost of borrowing | 5.4% | 5.0% | 0.4% | 8.0% | - Despite a decrease in average indebtedness, the average cost of borrowing increased, leading to a **7.5%** decrease in net interest expense[97](index=97&type=chunk) [Income Taxes](index=29&type=section&id=MD%26A%20-%20Income%20Taxes%20(Three%20Months)) Income Taxes (Three Months Ended December 31) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | Provision for income taxes (in thousands) | $16,529 | $16,166 | $363 | 2.2% | | Effective tax rate | 23.8% | 23.7% | 0.1% | 0.4% | - The slight increase in the effective tax rate was primarily due to discrete items related to stock-based compensation[98](index=98&type=chunk) [Results of Operations: Nine Months Ended December 31, 2023 vs. 2022](index=30&type=section&id=MD%26A%20-%20Results%20of%20Operations%3A%20Nine%20Months%20Ended%20December%2031%2C%202023%20vs.%202022) Total revenues increased by **0.8%** to **$848.4 million**, driven by international growth, with gross profit up **0.2%** [Total Segment Revenues](index=30&type=section&id=MD%26A%20-%20Total%20Segment%20Revenues%20(Nine%20Months)) Total Revenues (Nine Months Ended December 31, in thousands) | Segment | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | North American OTC Healthcare | $727,131 | $731,456 | $(4,325) | (0.6)% | | International OTC Healthcare | $121,235 | $110,400 | $10,835 | 9.8% | | **Consolidated Total** | **$848,366** | **$841,856** | **$6,510** | **0.8%** | - North American OTC Healthcare revenues decreased by **0.6%**, primarily due to declines in Women's Health (down **6.6%**), Analgesics (down **4.6%**), and Cough & Cold (down **4.2%**), partially offset by growth in Eye & Ear Care (up **7.8%**) and Dermatologicals (up **5.3%**)[101](index=101&type=chunk)[100](index=100&type=chunk) - International OTC Healthcare revenues increased by **9.8%**, mainly driven by growth in Women's Health (up **25.2%**), Eye & Ear Care (up **20.5%**), and Analgesics (up **132.3%**)[102](index=102&type=chunk)[100](index=100&type=chunk) [Gross Profit](index=31&type=section&id=MD%26A%20-%20Gross%20Profit%20(Nine%20Months)) Gross Profit (Nine Months Ended December 31, in thousands) | Segment | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | North American OTC Healthcare | $403,499 | $404,448 | $(949) | (0.2)% | | International OTC Healthcare | $69,132 | $67,082 | $2,050 | 3.1% | | **Consolidated Total** | **$472,631** | **$471,530** | **$1,101** | **0.2%** | - Consolidated gross profit margin slightly decreased to **55.7%** in the nine months ended December 31, 2023, from **56.0%** in the prior year, primarily due to increased supply chain costs and product mix, partly offset by pricing actions[104](index=104&type=chunk) - North American OTC Healthcare gross profit margin increased to **55.5%** from **55.3%**, driven by product mix and pricing actions, partially offset by increased supply chain costs[105](index=105&type=chunk) - International OTC Healthcare gross profit margin decreased to **57.0%** from **60.8%**, primarily due to increased supply chain costs and product mix[106](index=106&type=chunk) [Contribution Margin](index=31&type=section&id=MD%26A%20-%20Contribution%20Margin%20(Nine%20Months)) Contribution Margin (Nine Months Ended December 31, in thousands) | Segment | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | North American OTC Healthcare | $302,792 | $304,889 | $(2,097) | (0.7)% | | International OTC Healthcare | $54,040 | $52,448 | $1,592 | 3.0% | | **Consolidated Total** | **$356,832** | **$357,337** | **$(505)** | **(0.1)%** | - North American OTC Healthcare contribution margin decreased by **0.7%** and as a percentage of revenues slightly decreased to **41.6%** from **41.7%**, mainly due to a slight increase in advertising and marketing spend[109](index=109&type=chunk) - International OTC Healthcare contribution margin increased by **3.0%** but as a percentage of revenues decreased to **44.6%** from **47.5%**, primarily due to the decrease in gross profit margin[110](index=110&type=chunk) [General and Administrative](index=32&type=section&id=MD%26A%20-%20General%20and%20Administrative%20(Nine%20Months)) - General and administrative expenses remained flat at **$79.7 million** for both the nine months ended December 31, 2023, and 2022[111](index=111&type=chunk) [Depreciation and Amortization](index=32&type=section&id=MD%26A%20-%20Depreciation%20and%20Amortization%20(Nine%20Months)) - Depreciation and amortization expenses decreased to **$16.9 million** for the nine months ended December 31, 2023, from **$19.1 million** in the prior year, primarily due to lower amortization expense following impairment charges on finite-lived brands in fiscal 2023[112](index=112&type=chunk) [Interest Expense, Net](index=32&type=section&id=MD%26A%20-%20Interest%20Expense%2C%20Net%20(Nine%20Months)) Interest Expense, Net (Nine Months Ended December 31) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | Interest expense, net (in thousands) | $51,900 | $50,188 | $1,712 | 3.4% | | Average indebtedness (in billions) | $1.3 | $1.5 | $(0.2) | (13.3)% | | Average cost of borrowing | 5.4% | 4.5% | 0.9% | 20.0% | - Despite a decrease in average indebtedness, the average cost of borrowing increased significantly, leading to a **3.4%** increase in net interest expense[113](index=113&type=chunk) [Income Taxes](index=32&type=section&id=MD%26A%20-%20Income%20Taxes%20(Nine%20Months)) Income Taxes (Nine Months Ended December 31) | Metric | 2023 | 2022 | Change ($) | Change (%) | | :--------------------------------- | :------- | :------- | :--------- | :--------- | | Provision for income taxes (in thousands) | $48,822 | $47,361 | $1,461 | 3.1% | | Effective tax rate | 23.4% | 23.0% | 0.4% | 1.7% | - The increase in the effective tax rate was primarily due to discrete items related to stock-based compensation and state tax rate legislative changes[114](index=114&type=chunk) [Liquidity and Capital Resources](index=32&type=section&id=MD%26A%20-%20Liquidity%20and%20Capital%20Resources) Liquidity is driven by operating cash flows and debt facilities, with **$1.2 billion** outstanding debt and covenant compliance [Liquidity](index=32&type=section&id=MD%26A%20-%20Liquidity) - The primary source of cash is cash flow from operations, supplemented by debt facilities, primarily for acquisitions[115](index=115&type=chunk) - The company expects cash generated from operations and existing credit facilities to be adequate for working capital and capital expenditures for the next twelve months, excluding acquisitions[115](index=115&type=chunk) Cash Flow Activities (Nine Months Ended December 31, in thousands) | Activity | 2023 | 2022 | Change ($) | | :--------------------------------- | :------- | :------- | :--------- | | Operating Activities | $182,019 | $170,729 | $11,290 | | Investing Activities | $(5,107) | $(5,226) | $119 | | Financing Activities | $(172,571) | $(105,351) | $(67,220) | | Net change in cash and cash equivalents | $5,126 | $59,173 | $(54,047) | - Net cash provided by operating activities increased by **$11.3 million**, primarily due to decreased working capital. Net cash used in financing activities increased by **$67.2 million**, mainly due to higher net debt repayments[117](index=117&type=chunk)[119](index=119&type=chunk) [Capital Resources](index=33&type=section&id=MD%26A%20-%20Capital%20Resources) - As of December 31, 2023, total outstanding indebtedness was **$1.2 billion**, comprising **$400 million** in 2019 Senior Notes, **$600 million** in 2021 Senior Notes, and **$210 million** in 2012 Term B-5 Loans[120](index=120&type=chunk)[125](index=125&type=chunk) - The 2012 ABL Revolver had no outstanding balance and a borrowing capacity of **$168.9 million** as of December 31, 2023[120](index=120&type=chunk) - ABL Amendment No. 9 increased the aggregate revolving commitment of the 2012 ABL Revolver from **$175.0 million** to **$200.0 million** and extended its maturity to December 8, 2028[121](index=121&type=chunk) Future Principal Payments (in thousands) | Year Ending March 31, | Amount | | :--------------------------------- | :------- | | 2024 (remaining three months) | $0 | | 2025 | $0 | | 2026 | $0 | | 2027 | $0 | | 2028 | $400,000 | | Thereafter | $810,000 | | **Total** | **$1,210,000** | [Covenants](index=33&type=section&id=MD%26A%20-%20Covenants) - The company's debt facilities include financial covenants requiring maintenance of specific leverage (less than **6.50 to 1.0**), interest coverage (greater than **2.25 to 1.0**), and fixed charge ratios (greater than **1.0 to 1.0**)[126](index=126&type=chunk)[127](index=127&type=chunk) - As of December 31, 2023, the company was in compliance with all applicable financial and restrictive covenants under its debt agreements and anticipates continued compliance for the next twelve months[127](index=127&type=chunk) [Critical Accounting Policies and Estimates](index=34&type=section&id=MD%26A%20-%20Critical%20Accounting%20Policies%20and%20Estimates) - There were no material changes to the company's critical accounting policies during the nine months ended December 31, 2023[128](index=128&type=chunk) [Recent Accounting Pronouncements](index=34&type=section&id=MD%26A%20-%20Recent%20Accounting%20Pronouncements) - A description of recently issued and adopted accounting pronouncements is included in Note 1 to the unaudited Condensed Consolidated Financial Statements[129](index=129&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses exposure to interest rate and foreign currency exchange rate risks, with sensitivity analyses [Interest Rate Risk](index=37&type=section&id=Market%20Risk%20-%20Interest%20Rate%20Risk) - Approximately **$210.0 million** of the company's debt carries a variable interest rate, exposing it to changes in interest rates[136](index=136&type=chunk) - A hypothetical **1.0%** increase in interest rates on variable rate debt would adversely impact pre-tax earnings and cash flows by approximately **$0.7 million** for the three months and **$2.3 million** for the nine months ended December 31, 2023[137](index=137&type=chunk) [Foreign Currency Exchange Rate Risk](index=37&type=section&id=Market%20Risk%20-%20Foreign%20Currency%20Exchange%20Rate%20Risk) - Approximately **17.0%** (three months) and **14.1%** (nine months) of gross revenues for the period ended December 31, 2023, were denominated in currencies other than the U.S. Dollar, primarily Canadian and Australian Dollars[138](index=138&type=chunk) - A hypothetical **10.0%** adverse change in foreign currency exchange rates would impact pre-tax income by approximately **$2.7 million** for the three months and **$6.8 million** for the nine months ended December 31, 2023[139](index=139&type=chunk) [Item 4. Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms effective disclosure controls and procedures, with no material changes in internal control [Disclosure Controls and Procedures](index=37&type=section&id=Controls%20-%20Disclosure%20Controls%20and%20Procedures) - As of December 31, 2023, the company's management, including the CEO and CFO, concluded that disclosure controls and procedures were effective[140](index=140&type=chunk) [Changes in Internal Control over Financial Reporting](index=37&type=section&id=Controls%20-%20Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) - There were no material changes in internal control over financial reporting during the quarter ended December 31, 2023[141](index=141&type=chunk) [PART II. OTHER INFORMATION](index=37&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1A. Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) Refers to risk factors from the Annual Report on Form 10-K, noting no material changes and potential quarterly fluctuations - Readers should carefully consider the risk factors discussed in the Annual Report on Form 10-K for the fiscal year ended March 31, 2023[142](index=142&type=chunk) - The risk factors described in the Annual Report on Form 10-K have not materially changed in the period covered by this Quarterly Report on Form 10-Q[142](index=142&type=chunk) - Quarterly operating results and revenues may fluctuate, and results for any one quarter are not necessarily indicative of future performance, which could adversely impact the market price of securities[143](index=143&type=chunk)[145](index=145&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed as part of the Form 10-Q, including corporate documents and certifications - The exhibits include the Amended and Restated Certificate of Incorporation, Bylaws, Amendment No. 9 to the ABL Credit Agreement, and certifications from the Principal Executive Officer and Principal Financial Officer[147](index=147&type=chunk) [Signatures](index=41&type=section&id=Signatures) This section formally concludes the Form 10-Q with required signatures, confirming due authorization - The report was signed on February 8, 2024, by Christine Sacco, Chief Financial Officer (Principal Financial Officer and Duly Authorized Officer)[151](index=151&type=chunk)

Continued Strong Results in Q2 FY 24 5 Q2 FY 24 Sales Drivers 50 PACK ORIGINAL Dual Action: Second Quarter FY 2024 Results November 2吋, 2023 I. Performance Update S E C O N D Q U A R T E R F Y 2 4 R E S U L T S eve ◼ Solid quarterly Revenue of $286.3 million, similar to prior year's record level ◼ Consumers continue to seek the benefits of trusted consumer healthcare brands ◼ Continue to benefit from leading & diversified portfolio ◼ Gross Margin as expected with sequential improvement ◼ Solid financial pro ...

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements, including income, balance sheets, and cash flows, with detailed notes on accounting policies and financial data [Condensed Consolidated Statements of Income and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Total revenues slightly decreased to $286.3 million for the three months, while net income increased to $53.6 million Condensed Consolidated Statements of Income and Comprehensive Income (in thousands, except EPS) | Metric | Three Months Ended Sep 30, 2023 | Three Months Ended Sep 30, 2022 | Six Months Ended Sep 30, 2023 | Six Months Ended Sep 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $286,316 | $289,273 | $565,625 | $566,332 | | **Gross Profit** | $160,020 | $161,009 | $314,693 | $321,128 | | **Operating Income** | $88,250 | $84,384 | $173,444 | $171,398 | | **Net Income** | $53,559 | $51,023 | $106,835 | $106,295 | | **Diluted EPS** | $1.07 | $1.02 | $2.13 | $2.11 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased to $3.33 billion, primarily due to a reduction in long-term debt to $1.26 billion Condensed Consolidated Balance Sheets (in thousands) | Balance Sheet Item | September 30, 2023 | March 31, 2023 | | :--- | :--- | :--- | | **Total Assets** | $3,332,874 | $3,353,729 | | Cash and cash equivalents | $60,067 | $58,489 | | Goodwill | $526,860 | $527,553 | | Intangible assets, net | $2,328,250 | $2,341,893 | | **Total Liabilities** | $1,796,915 | $1,906,645 | | Long-term debt, net | $1,262,972 | $1,345,788 | | **Total Stockholders' Equity** | $1,535,959 | $1,447,084 | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operations decreased to $110.5 million, while financing activities used $107.7 million for debt repayment and stock repurchases Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended Sep 30, 2023 | Six Months Ended Sep 30, 2022 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $110,547 | $115,787 | | **Net cash provided by (used in) investing activities** | $(611) | $(3,423) | | **Net cash used in financing activities** | $(107,728) | $(95,330) | | Increase (decrease) in cash and cash equivalents | $1,578 | $15,257 | - Key financing activities for the six months ended September 30, 2023 included **$85.0 million** in term loan repayments and **$25.0 million** for the repurchase of common stock[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail accounting policies, debt rate transition, stable goodwill, segment revenues, and significant customer concentration with Walmart and Amazon - The company's debt facilities transitioned their reference rate from LIBOR to the **Secured Overnight Financing Rate (SOFR)** effective July 1, 2023[31](index=31&type=chunk)[45](index=45&type=chunk) - As of September 30, 2023, the company determined no events occurred that would indicate potential impairment of its **$526.9 million** in goodwill or **$2.3 billion** in intangible assets[35](index=35&type=chunk)[38](index=38&type=chunk) - For the six months ended September 30, 2023, **Walmart** accounted for approximately **20.0%** of gross revenues and **Amazon** accounted for **10.3%**[68](index=68&type=chunk) Segment Revenues (Six Months Ended Sep 30, 2023, in thousands) | Segment Revenues | Revenue (in thousands) | | :--- | :--- | | **North American OTC Healthcare** | $490,566 | | **International OTC Healthcare** | $75,059 | | **Total Consolidated** | $565,625 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, noting slight revenue decreases, segment variations, gross profit margin changes, and cash flow utilization for debt reduction [Results of Operations (Three Months Ended Sep 30, 2023 vs 2022)](index=26&type=section&id=Results%20of%20Operations%20(Three%20Months)) Total revenues decreased 1.0% to $286.3 million, with North American OTC down 3.0% and International OTC up 12.6% Segment Revenue (Three Months Ended Sep 30, in thousands) | Segment Revenue | 2023 (in thousands) | 2022 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | **North American OTC Healthcare** | $244,423 | $252,054 | (3.0)% | | **International OTC Healthcare** | $41,893 | $37,219 | 12.6% | | **Total Consolidated** | $286,316 | $289,273 | (1.0)% | - The North American revenue decline was primarily due to lower sales in **Women's Health**, **Analgesics**, and **Gastrointestinal** categories[88](index=88&type=chunk)[89](index=89&type=chunk) - The International revenue increase was driven by growth in **Eye & Ear Care** (+50.5%) and **Women's Health** (+49.0%)[88](index=88&type=chunk)[90](index=90&type=chunk) - Consolidated contribution margin increased by **2.3%** to **$119.9 million**, with the margin rate improving to **41.9%** from **40.5%** year-over-year, mainly due to reduced advertising and marketing spend in North America[96](index=96&type=chunk)[97](index=97&type=chunk) [Results of Operations (Six Months Ended Sep 30, 2023 vs 2022)](index=29&type=section&id=Results%20of%20Operations%20(Six%20Months)) Total revenues for the six-month period were nearly flat at $565.6 million, with North American OTC down 0.8% and International OTC up 4.6% Segment Revenue (Six Months Ended Sep 30, in thousands) | Segment Revenue | 2023 (in thousands) | 2022 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | **North American OTC Healthcare** | $490,566 | $494,572 | (0.8)% | | **International OTC Healthcare** | $75,059 | $71,760 | 4.6% | | **Total Consolidated** | $565,625 | $566,332 | (0.1)% | - Gross profit margin for the six-month period decreased from **56.7%** to **55.6%** year-over-year, primarily due to increased supply chain costs and product mix, partly offset by pricing actions[108](index=108&type=chunk) - Net interest expense increased to **$35.3 million** from **$32.3 million**, as the average cost of borrowing rose to **5.4%** from **4.3%**, despite a decrease in average indebtedness[117](index=117&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) Operating cash flow was $110.5 million, with $60.1 million cash and $171.2 million available credit, and total debt reduced to $1.3 billion - Net cash from operations was **$110.5 million** for the six months ended September 30, 2023, a decrease of **$5.2 million** from the prior year, primarily due to increased working capital[120](index=120&type=chunk)[121](index=121&type=chunk) - As of September 30, 2023, total outstanding indebtedness was **$1.3 billion**, and the company had a borrowing capacity of **$171.2 million** on its revolving credit facility[124](index=124&type=chunk) - The company is in compliance with its debt covenants, which include a leverage ratio of less than **6.50 to 1.0** and an interest coverage ratio greater than **2.25 to 1.0**[129](index=129&type=chunk)[130](index=130&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate fluctuations on $275 million variable debt and foreign currency exposure, impacting pre-tax earnings - The company has **$275.0 million** of variable-rate debt; a **1.0%** increase in interest rates would reduce pre-tax earnings by approximately **$1.6 million** over a six-month period[138](index=138&type=chunk)[139](index=139&type=chunk) - A hypothetical **10.0%** adverse change in foreign currency exchange rates would impact pre-tax income by approximately **$4.1 million** for the six months ended September 30, 2023[141](index=141&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of September 30, 2023, with no material changes to internal controls - The Chief Executive Officer and Chief Financial Officer concluded that as of September 30, 2023, the Company's disclosure controls and procedures were **effective**[142](index=142&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[143](index=143&type=chunk) [PART II. OTHER INFORMATION](index=36&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors previously disclosed in the Annual Report on Form 10-K for the fiscal year ended March 31, 2023 - There have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended March 31, 2023[144](index=144&type=chunk) [Other Information](index=38&type=section&id=Item%205.%20Other%20Information) A company officer adopted a Rule 10b5-1 trading plan on September 15, 2023, to sell up to 15,871 shares - On September 15, 2023, Mary Beth Fritz, Senior Vice President, Quality & Regulatory Affairs, adopted a Rule 10b5-1 trading plan to sell a total of **15,871** ordinary shares; the plan expires on September 27, 2024[148](index=148&type=chunk) [Exhibits](index=39&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including officer certifications and Inline XBRL documents - The report includes standard exhibits such as officer certifications (**31.1, 31.2, 32.1, 32.2**) and XBRL data files (**101 series**)[150](index=150&type=chunk)

Financial Data and Key Metrics Changes - Q1 revenue of $279.3 million increased by 1.8% organically compared to the prior year, with EBITDA and EPS both slightly declining from the previous year, but EBITDA margin remained consistent with long-term expectations [2][3][12] - Total company gross margin was 55.4% in Q1, which increased sequentially but declined by 240 basis points year-over-year due to cost increases, partially offset by pricing actions and cost savings [5][7] - Diluted EPS for Q1 was $1.06, down from $1.09 in the prior year, impacted by cost increases and higher interest rates [7] Business Line Data and Key Metrics Changes - North America segment revenues increased by 1.8% and International segment revenues increased by 1.6% year-over-year, excluding foreign exchange effects [3] - The largest growth drivers in Q1 were gastrointestinal (GI) and skin care categories, with notable performance from Dramamine [4][42] Market Data and Key Metrics Changes - The international business, excluding FX, was up slightly as anticipated, with an outlook for mid-single-digit growth for the full year [18] - E-commerce channel continued to show year-over-year growth, reflecting a long-term trend of higher online purchasing [4] Company Strategy and Development Direction - The company reaffirmed its full-year outlook, anticipating revenue of $1.135 billion to $1.140 billion and organic revenue growth of approximately 1% to 2% versus fiscal '23 [12] - The company plans to continue investing in brand-building and maintaining a disciplined capital deployment strategy, focusing on reducing debt and building M&A capacity [75][78] Management's Comments on Operating Environment and Future Outlook - Management noted that inflation is largely wage-related and expected to remain consistent, with some relief on certain costs such as freight [16] - The company expects gross margin to remain consistent throughout the year, with Q2 estimated to be similar to Q1 [5][81] Other Important Information - The company generated $46.6 million in free cash flow in Q1, down from the prior year due to timing of working capital [8] - Approximately 425,000 shares were repurchased for $25 million, completing the previously authorized share repurchase program [9] Q&A Session Summary Question: Dynamic between units and pricing and cost normalization - Management indicated that for fiscal '24, they expect about 1 point of growth from price and 1 point from volume, with Q1 growth primarily from pricing [15][16] Question: Performance of Hydralyte in international business - Management stated that the international business, excluding FX, was up slightly as anticipated, with a return to historic growth levels expected [18] Question: Inventory levels at retail - Management noted that inventory levels have been consistent over the last few quarters, with no significant areas for restocking [19] Question: Women's health category outlook - Management anticipates stabilization and long-term growth for the women's health business, despite a year-over-year decline in the quarter [23][24] Question: Cough and cold category performance - Management expects more normalized trends in cough and cold sales, with inventory levels being filled at the retailer level [25][26] Question: Channel shifts and potential risks - Management observed some movement in shopper preferences but noted that they are well-positioned across all channels [27][29] Question: Advertising and marketing focus - Management confirmed that advertising and marketing resources are allocated based on opportunities and new product launches, with no significant changes in strategy [51][83]

RIPLE CLEAN O Safe Harbor Disclosure F I R S T Q U A R T E R F Y 2 4 R E S U L T S I. Performance Update F I R S T Q U A R T E R F Y 2 4 R E S U L T S Business Momentum Continued in First Quarter FY 24 ◼ Continued strong performance enabled by benefits of leading & diversified portfolio 50 rac Prestige Consumer HEALTHCARE ULTIMATE All adjusted GAAP numbers presented are footnoted and reconciled to their closest GAAP measurement in the attached reconciliation schedule or in our August 3, 2023 earnings releas ...

[PART I. FINANCIAL INFORMATION](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited condensed consolidated financial statements for Q2 2023, showing slight net income decrease and debt reduction [Condensed Consolidated Statements of Income and Comprehensive Income](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income%20and%20Comprehensive%20Income) Revenues slightly increased to $279.3M, but net income declined to $53.3M due to higher cost of sales | Financial Metric | Three Months Ended June 30, 2023 (in millions) | Three Months Ended June 30, 2022 (in millions) | | :--- | :--- | :--- | | **Total Revenues** | $279.3 | $277.1 | | **Gross Profit** | $154.7 | $160.1 | | **Operating Income** | $85.2 | $87.0 | | **Net Income** | $53.3 | $55.3 | | **Diluted EPS** | $1.06 | $1.09 | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly decreased to $3.35B, long-term debt reduced to $1.32B, and equity rose to $1.48B | Balance Sheet Item | June 30, 2023 (in millions) | March 31, 2023 (in millions) | | :--- | :--- | :--- | | **Total Current Assets** | $391.8 | $391.7 | | **Total Assets** | $3,345.6 | $3,353.7 | | **Long-term debt, net** | $1,316.7 | $1,345.8 | | **Total Liabilities** | $1,865.3 | $1,906.6 | | **Total Stockholders' Equity** | $1,480.3 | $1,447.1 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow decreased to $48.1M, with $54.2M used in financing for debt repayment and share repurchases | Cash Flow Activity | Three Months Ended June 30, 2023 (in millions) | Three Months Ended June 30, 2022 (in millions) | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $48.1 | $58.2 | | **Net cash provided by (used in) investing activities** | $2.3 | $(1.0) | | **Net cash used in financing activities** | $(54.2) | $(47.4) | | **Net change in cash and cash equivalents** | $(3.9) | $8.7 | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Details accounting policies, segment performance, debt, and customer concentration, noting economic uncertainties and major customer revenue - The company faces economic uncertainty from supply chain constraints, rising interest rates, and inflation, which could affect product demand, prices, and supply. To date, these conditions have not had a material negative impact on operations or liquidity[23](index=23&type=chunk)[24](index=24&type=chunk) - Significant revenue concentration exists with top customers. For the three months ended June 30, 2023, Walmart accounted for approximately **20.8%** of gross revenues, and Amazon accounted for **11.0%**[63](index=63&type=chunk) Segment Performance (Q1 FY2024) | Segment Performance (Q1 FY2024) | North American OTC | International OTC | Consolidated | | :--- | :--- | :--- | :--- | | **Total Revenues** | $246.1M | $33.2M | $279.3M | | **Contribution Margin** | $104.7M | $13.8M | $118.4M | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q1 FY2024 results, noting revenue growth, gross margin contraction, and liquidity for debt and share repurchases [Results of Operations](index=24&type=section&id=Results%20of%20Operations) Total revenues increased 0.8% to $279.3M, but gross profit fell 3.4% to $154.7M due to higher supply chain costs Revenue by Segment (Q1 FY2024 vs Q1 FY2023) | Revenue by Segment (Q1 FY2024 vs Q1 FY2023) | 2023 | 2022 | % Change | | :--- | :--- | :--- | :--- | | **North American OTC Healthcare** | $246.1M | $242.5M | +1.5% | | **International OTC Healthcare** | $33.2M | $34.5M | -4.0% | | **Total Consolidated** | $279.3M | $277.1M | +0.8% | - Gross profit margin decreased to **55.4%** from **57.8%** in the prior year, primarily due to increased supply chain costs and unfavorable product mix[85](index=85&type=chunk) - Interest expense increased to **$17.7 million** from **$15.3 million** YoY, as the average cost of borrowing rose to **5.3%** from **4.1%**, despite a decrease in average indebtedness[94](index=94&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) Operating cash flow decreased to $48.1M, used for $30M debt repayment and $25M share repurchases, with $1.3B total debt Cash Flow Summary (Q1 FY2024 vs Q1 FY2023) | Cash Flow Summary (Q1 FY2024 vs Q1 FY2023) | 2023 | 2022 | | :--- | :--- | :--- | | **Cash from Operating Activities** | $48.1M | $58.2M | | **Cash from Investing Activities** | $2.3M | $(1.0)M | | **Cash used in Financing Activities** | $(54.2)M | $(47.4)M | | **Net Change in Cash** | $(3.9)M | $8.7M | - As of June 30, 2023, total outstanding indebtedness was **$1.3 billion**, consisting of senior notes and term loans. The company had no outstanding balance on its **$174.9 million** ABL Revolver[101](index=101&type=chunk)[105](index=105&type=chunk) - The company was in compliance with all financial covenants, including leverage ratio, interest coverage ratio, and fixed charge ratio requirements[105](index=105&type=chunk)[106](index=106&type=chunk)[107](index=107&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces interest rate risk on $330M variable-rate debt and foreign currency risk on 10.6% of revenues - The company has **$330.0 million** of variable-rate debt. A hypothetical **1.0%** increase in interest rates would adversely impact pre-tax earnings by approximately **$0.9 million** for the quarter[116](index=116&type=chunk)[117](index=117&type=chunk) - Approximately **10.6%** of gross revenues were denominated in foreign currencies. A hypothetical **10.0%** adverse change in foreign currency exchange rates would impact pre-tax income by approximately **$1.7 million** for the quarter[118](index=118&type=chunk)[119](index=119&type=chunk) [Item 4. Controls and Procedures](index=31&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of June 30, 2023, with no material changes to internal controls - Based on an evaluation as of June 30, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[120](index=120&type=chunk) - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[121](index=121&type=chunk) [PART II. OTHER INFORMATION](index=31&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes to previously disclosed risk factors from the Annual Report on Form 10-K for FY2023 - The risk factors described in the Annual Report on Form 10-K for the year ended March 31, 2023, have not materially changed during the period covered by this quarterly report[122](index=122&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=33&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased 515,432 shares, completing a $25M program and satisfying tax withholding obligations Share Repurchase Summary | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | **May 2023** | 363,138 | $59.88 | | **June 2023** | 152,294 | $57.54 | | **Total** | 515,432 | $59.19 | - The company completed its **$25.0 million** share repurchase program announced in May 2023 by repurchasing **426,479** shares[126](index=126&type=chunk) [Item 5. Other Information](index=33&type=section&id=Item%205.%20Other%20Information) Details 2023 Annual Meeting voting results, including director elections, auditor ratification, and executive compensation approval - At the Annual Meeting on August 1, 2023, all seven director nominees were elected to the Board[127](index=127&type=chunk) - Stockholders ratified the appointment of PricewaterhouseCoopers LLP as the independent registered public accounting firm for fiscal year 2024[128](index=128&type=chunk) - A non-binding resolution to approve named executive officer compensation was passed, and stockholders advised for future advisory votes on compensation to be held every one year[129](index=129&type=chunk)[130](index=130&type=chunk) [Item 6. Exhibits](index=35&type=section&id=Item%206.%20Exhibits) Lists all exhibits filed with Form 10-Q, including Term Loan Credit Agreement amendment and officer certifications - Key exhibits filed include Amendment No. 7 to the Term Loan Credit Agreement and officer certifications pursuant to SEC rules[132](index=132&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM ______ TO ______ Commission File Number: 001-32433 (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2023 PRESTIGE CONSUMER HEALTHCARE INC. (Exact Name of Registrant as Specified in Its Charter) (State or Other Jurisdiction of Inco ...

Financial Data and Key Metrics Changes - Q3 2023 revenues were $276 million, representing a 2% organic growth compared to the prior year, driven by strong performance in the cough and cold category and international segment [54][59] - Diluted EPS for Q3 was $1.4, with a year-to-date diluted EPS of $3.14, slightly down from $3.15 in the prior year due to gross margin compression [60][69] - Gross margin for the first nine months was 56%, a decline of 170 basis points from the previous year's adjusted gross margin of 57.7% [89][135] Business Line Data and Key Metrics Changes - The cough and cold category saw over 20% growth year-to-date, while the women's health and eye & ear care categories experienced declines [70][88] - International segment revenues increased by over 25% in Q3, excluding foreign exchange effects, with strong performance across various regions and product categories [73] Market Data and Key Metrics Changes - North American revenues were down approximately 1% year-over-year, with significant increases in cough and cold and gastrointestinal categories offset by declines in women's health and eye & ear care [88] - E-commerce now accounts for about 15% of total sales, continuing to grow in the high single digits [103] Company Strategy and Development Direction - The company aims to maintain a consistent pipeline of new products and innovation, with expectations for continued growth in fiscal 2024 [107] - Strategic investments in inventory are being made to better align with retail customer service requirements and to mitigate supply chain disruptions [29][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business's positioning and consumption trends, anticipating continued growth in fiscal 2024 after two record years [16][68] - The company is adapting to a dynamic supply chain environment, focusing on building inventory buffers to support future growth opportunities [22][29] Other Important Information - The company anticipates free cash flow of $220 million or more for the year, reflecting strategic increases in inventory investments [61][75] - The leverage ratio is expected to gradually decrease over time, providing more capital allocation flexibility [55][96] Q&A Session Summary Question: What drove the sales reduction to the lower end of the range? - The sales guidance was adjusted from 4% growth to 3% growth primarily due to foreign exchange headwinds, particularly with the Australian and Canadian dollars [38] Question: When do you expect improvements in the women's health and eye & ear care categories? - Management did not provide specific timelines but acknowledged ongoing challenges in these categories [40] Question: Is there any pushback from retailers on pricing? - There has been no significant pushback from retailers on pricing, as they are also facing inflationary pressures [113] Question: What percentage of growth is attributed to pricing actions? - Pricing actions are expected to account for about two-thirds of the growth for the year, estimated in the $15 million to $20 million range [117] Question: How is the company addressing supply chain disruptions? - The company is focusing on building inventory buffers and adding new suppliers to mitigate supply chain challenges [28][125]