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Prestige sumer Healthcare (PBH) - 2026 Q1 - Earnings Call Transcript
2025-08-07 13:32
Financial Data and Key Metrics Changes - Q1 sales were approximately $250 million, which was below the forecast of $258 million to $260 million, representing a year-over-year decline largely due to supply chain issues in eye care [6][12] - Gross margin expanded by 150 basis points to 56.2%, attributed to ongoing cost savings efforts [8][12] - Diluted EPS was $0.95, up approximately 6% compared to the adjusted prior year, despite the sales miss [9][16] - Free cash flow reached a quarterly record of $78 million, enabling capital deployment to enhance shareholder value [9][17] Business Line Data and Key Metrics Changes - North America segment revenues decreased by 8.4%, while International segment revenues increased by 7.1% year-over-year [13] - The International segment experienced organic sales growth of 7%, driven by broad-based sales growth [14] Market Data and Key Metrics Changes - The company anticipates a full-year revenue of $1.1 billion to $1.115 billion, with organic revenue expected to decline approximately 1.5% to 3% [22] - For Q2, revenues are expected to be approximately $256 million to $259 million, down year-over-year due to supply chain timing and lower retail order patterns [22] Company Strategy and Development Direction - The company announced the acquisition of Pillar Five to secure and expand long-term supply for eye care products, which is expected to improve supply stability in the second half of the year [11][19] - The company maintains confidence in its diverse consumer healthcare portfolio and long-term growth opportunities despite the disappointing start to the year [21] Management Comments on Operating Environment and Future Outlook - Management highlighted heightened business environment uncertainty due to supply chain constraints, high inflation, and geopolitical events [5] - The company expects significant improvement in Clear Eye shipments in the second half of the year, with a focus on recovering lost sales in FY 2027 and beyond [22][29] Other Important Information - The anticipated cost of tariffs for the full year is approximately $5 million, which the company expects to offset through strategic actions [15] - The acquisition of Pillar Five is expected to be funded from cash on hand and will have a minimal impact on the P&L, being approximately neutral to EPS on a normalized basis [19][63] Q&A Session Summary Question: Change in retail order patterns and inventory destocking - Management noted increased order volatility from retailers in July, which is expected to significantly impact Q2 but anticipates a return to normalized order trends in the second half [25][26] Question: Confidence in Clear Eyes supply normalizing - Management expressed confidence in supply normalizing in the back half of the year, with expectations of recovering lost sales in FY 2027 and beyond [29][30] Question: Impact of bringing eye care manufacturing in-house on margins - Management does not expect any meaningful movement in gross margin as a result of the acquisition of Pillar Five, indicating it will be largely neutral to the P&L [37][38] Question: Inventory levels and destocking expectations - Management does not see any meaningful ramp-up of inventory among their largest customers, indicating that inventory levels are not inflated [45][46] Question: Performance of the women's health business - Management remains optimistic about the continued recovery of the Summer's Eve brand, expecting positive performance for the remainder of the year [48] Question: Sustaining international growth - Management is confident in sustaining international growth, expecting a slight softening compared to the first quarter but still in line with long-term growth algorithms [70]
Prestige sumer Healthcare (PBH) - 2026 Q1 - Earnings Call Transcript
2025-08-07 13:30
Financial Data and Key Metrics Changes - Q1 sales were approximately $250 million, which was below the forecast of $258 million to $260 million, representing a year-over-year decline largely due to supply chain issues and lower sales in eye care [5][10] - Gross margin expanded by 150 basis points to 56.2%, attributed to cost savings efforts [6][12] - Diluted EPS was $0.95, up approximately 6% from the adjusted prior year, despite the sales miss [7][14] - Free cash flow reached a record $78 million, enabling capital deployment for shareholder value enhancement [7][15] Business Line Data and Key Metrics Changes - North America segment revenues decreased by 8.4%, while International segment revenues increased by 7.1% year-over-year [11][12] - The eye care segment faced significant supply constraints, impacting sales, while other segments like Dramamine and Fleet showed healthy consumption trends [6][12] Market Data and Key Metrics Changes - The International segment experienced organic sales growth of 7%, driven by broad-based sales growth [12] - E-commerce channel saw double-digit year-over-year consumption growth, indicating a long-term trend towards higher online purchasing [12] Company Strategy and Development Direction - The company announced the acquisition of Pillar Five to secure and expand long-term supply for eye care products, which is expected to improve supply stability in the second half of the year [9][17] - The company anticipates revenues for fiscal 2026 to be between $1.1 billion and $1.115 billion, with organic revenue expected to decline approximately 1.5% to 3% [20] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment in the start of the year but remains confident in the long-term growth opportunities of their consumer healthcare portfolio [19] - The company expects significant improvement in Clear Eye shipments in the second half of the year, despite current supply chain challenges [20][29] Other Important Information - The company maintained a leverage ratio of approximately 2.4 times and repurchased over 400,000 shares in Q1 [7][15] - The anticipated cost of tariffs for the full year is approximately $5 million, which the company expects to offset through strategic actions [13] Q&A Session Summary Question: Change in retail order patterns and inventory destocking - Management noted increased order volatility from retailers in July, disconnected from consistent consumption levels, impacting Q2 significantly [23][24] Question: Confidence in supply normalizing for Clear Eyes - Management expressed confidence in supply normalizing in the back half of the year, with new suppliers and a high-speed line expected to contribute [26][29] Question: Impact of bringing eye care manufacturing in-house on margins - Management indicated no meaningful movement in gross margin as a result of bringing manufacturing in-house, expecting it to be largely neutral to the P&L [36][39] Question: Outlook for cough and cold season - Management maintained the initial guidance for a modest decline in the cough and cold category, too early to tell at this point [42] Question: Inventory levels within segments - Management reported no meaningful ramp-up of inventory, indicating that current order patterns are disconnected from consumption [44] Question: Performance of Summer's Eve brand - Management expressed confidence in the continued positive momentum of the Summer's Eve brand for the remainder of the year [46] Question: International segment growth sustainability - Management expects to sustain international growth, projecting a long-term algorithm of over 5% for the segment [68]