Financial Data and Key Metrics Changes - Q2 revenue was $274.1 million, a decline of 3.4% from $283.8 million in the prior year, primarily due to lower eye and ear care category sales and cough and cold category sales [10][11] - Adjusted EPS was $1.07, slightly down from $1.09 in the prior year, but ahead of expectations due to sales performance [10][11] - Free cash flow for the first half was $134 million, up 10% year-over-year, with a full-year outlook of $245 million or more [5][15] Business Line Data and Key Metrics Changes - The North America segment saw a revenue decrease of 6.1%, while the international segment experienced a revenue increase of 2.7% [11][12] - E-commerce consumption growth remained strong, with double-digit year-over-year growth, driven by long-term investments [4][11] - The DenTek brand achieved over 50% market share in its category, with a focus on dental guards contributing significantly to revenue [6][8] Market Data and Key Metrics Changes - The overall market for eye care products has declined, impacting Clear Eyes' supply and market share [44] - International OTC segment business increased, supported by higher Hydralyte sales, despite Q2 being affected by distributor order timing [12][14] Company Strategy and Development Direction - The company is focused on diversifying its portfolio and channels to drive long-term growth, with a particular emphasis on e-commerce and brand building [4][6] - Plans to enhance shareholder value through share repurchases and potential M&A opportunities, including the acquisition of Pillar Five for approximately $100 million [16][18] - The company anticipates a revenue range of $1.1 billion to $1.115 billion for fiscal 2026, with organic growth expected to decline by approximately 1.5% to 3% [17] Management's Comments on Operating Environment and Future Outlook - Management noted heightened uncertainty in the business environment due to supply chain constraints, high inflation, and geopolitical events [3] - Confidence in the business strategy and diversified portfolio is strong, with expectations for improved supply of Clear Eyes in the second half of the year [17][34] - The company has not seen significant impacts from macroeconomic trends on its needs-based product categories [33][34] Other Important Information - Gross margin for the first half was 55.7%, up 60 basis points year-over-year, with expectations for a gross margin of approximately 56.5% for the full year [12][14] - Advertising and marketing expenses were down due to timing, expected to be 14% of sales for the full year, with Q3 anticipated to have the highest spend rate [13][14] Q&A Session Summary Question: Follow-up on Clear Eyes supply and shelf space - Management confirmed that supply chain improvements are expected to benefit Q3 and Q4, but acknowledged a reduction in market share due to supply constraints [21][23] Question: Cold and cough season expectations - Management indicated that the cold and flu category is not a significant revenue driver, and it is too early to predict performance for the upcoming season [25] Question: Retailer inventories health - Retail inventories have been steady, with no significant impacts from performance issues, aside from e-commerce order patterns [27] Question: Women's health performance - Women's health category experienced noise in order patterns, but overall performance remains positive over the trailing twelve months [29][46] Question: Macro environment impact - Management noted that while consumer trends are slowing, their needs-based products are somewhat insulated from broader economic pressures [33][34] Question: Capital allocation and M&A strategy - The company remains focused on M&A opportunities while also prioritizing share repurchases, with a disciplined approach to capital allocation [37][39] Question: Clear Eyes marketing investment post-supply improvement - Future marketing investments will be evaluated based on opportunities, with no immediate increase in overall A&M spending anticipated [65][67] Question: Private label competition - No significant changes in market share or impact from private label competition were reported [68]

Q2 FY26 Performance - Quarterly revenue reached $274.1 million, exceeding forecasts due to Clear Eyes supply timing and retail order timing[11] - Gross Margin was 55.3%, consistent with the prior year[11] - Adjusted Diluted EPS was $1.07, surpassing expectations[11] - Free Cash Flow year-to-date amounted to $134 million, a 10% increase compared to the previous year[11] Financial Results - Revenue decreased by 3.3% year-over-year, excluding foreign currency impacts[20] - EBITDA totaled $86.8 million, compared to $91.9 million in the prior year[20] - Adjusted Diluted EPS decreased by 1.8% year-over-year[20] FY26 Outlook - The company anticipates revenues between $1,100 million and $1,115 million[29] - Organic revenue is expected to decline by approximately 1.5% to 3.0%[29] - Adjusted Diluted EPS is projected to be between $4.54 and $4.58[29] - Free Cash Flow is expected to be $245 million or higher[29]

Core Insights - Prestige Consumer Healthcare Inc. reported second quarter revenues of $274.1 million, a decrease of 3.4% from $283.8 million in the same quarter last year, primarily due to lower sales in the Ear & Eye Care category, particularly for Clear Eyes® [3][12] - The company achieved a net income of $42.2 million for the second quarter, down from $54.4 million in the prior year, with diluted earnings per share of $0.86 compared to $1.09 in the previous year [4][10] - For the first six months of fiscal 2026, total revenues were $523.6 million, a decline of 5.0% from $550.9 million in the same period last year, again attributed to supply limitations for Clear Eyes [6][7] Financial Performance - The second quarter net income was reported at $42.2 million, with non-GAAP adjusted net income at $52.5 million, compared to $54.4 million in the prior year [4][10] - The first six months of fiscal 2026 saw net income of $89.7 million, down from $103.4 million in the same period last year, while non-GAAP adjusted net income increased slightly to $99.9 million from $99.4 million [7][8] - Free cash flow for the first six months was $133.6 million, an increase from $121.4 million in the prior year [9] Shareholder Value - The company repurchased approximately 1.1 million shares for about $75 million during the second quarter, totaling approximately 1.6 million shares repurchased for $109.8 million in the first six months [10][11] - The net debt position as of September 30, 2025, was approximately $0.9 billion, with a leverage ratio of 2.4x [11] Segment Performance - North American OTC Healthcare segment revenues for the second quarter were $230.8 million, down from $239.8 million in the prior year, primarily due to lower sales in the Eye & Ear Care category [12] - International OTC Healthcare segment revenues for the second quarter were $43.4 million, slightly down from $44.0 million in the previous year [14] - For the first six months, North American OTC revenues were $443.3 million, down from $472.1 million, while International OTC revenues increased to $80.3 million from $78.8 million [13][15] Outlook - The company reaffirmed its fiscal 2026 revenue outlook of $1,100 to $1,115 million, with expectations for eye care supply improvements in the second half of the year [16][18] - Adjusted diluted EPS outlook was updated to a range of $4.54 to $4.58, reflecting a slight increase from the previous range [10][18]

Core Insights - Prestige Consumer Healthcare Inc. is focusing on growth in its eye care business despite operational challenges in 2025 [1] - The acquisition of Pillar5 Pharma aims to resolve supply constraints and support long-term expansion in the eye care segment [2] - The company reported a 6.6% year-over-year revenue decline in Q1 2026 but showed momentum in other segments, including international OTC healthcare growth [3] Group 1: Company Strategy - Prestige Consumer Healthcare Inc. is taking strategic steps to secure growth in its eye care business amid operational challenges in 2025 [1] - The acquisition of Pillar5 Pharma is intended to address previous supply constraints and ensure reliable production for the Clear Eyes brand [2] Group 2: Financial Performance - The company experienced a 6.6% year-over-year revenue decline in Q1 2026 [3] - Despite the revenue decline, there was momentum in other business segments, including international OTC healthcare growth and improved gross margins [3] Group 3: Leadership Perspective - CEO Ron Lombardi emphasized that integrating Pillar5's capabilities strengthens the Clear Eyes franchise and enhances overall business resilience [3]

Company Overview - Prestige Consumer Healthcare focuses on niche categories where brands can compete successfully over the long term [2] - The company emphasizes the breadth and depth of its consumer connections through its product offerings [2] Product Impact - The company sells enough Clear Eyes and TheraTears to treat 12 billion irritated eye occasions annually [2] - It addresses 650 million sore and dry throat occasions each year [2] - The BC and Goody's powdered analgesic brands help treat approximately 17 million pain occasions weekly, including hangovers [2] - Monistat assists in treating about 8 million vaginal yeast infections annually [2]

Financial Data and Key Metrics Changes - The company reported a free cash flow of approximately $242 million for the previous year, with an outlook for this year exceeding $245 million [10][48] - The five-year compound annual growth rates (CAGRs) showed revenue growth of about 3.5%, organic growth of 2.5%, and earnings per share (EPS) growth of nearly 9% [12] Business Line Data and Key Metrics Changes - The largest category for the company is gastrointestinal (GI) health, followed by women's health, eye and ear care, skin care, and analgesics [4] - The company has a diverse portfolio that allows it to manage fluctuations in illness levels effectively, with brands performing variably based on market conditions [6][51] Market Data and Key Metrics Changes - The company's e-commerce sales have grown significantly, increasing from about 4% of total sales five years ago to approximately 16% at the end of the last fiscal year, with two-thirds of that coming from Amazon [25] - The international business, particularly in Australia, has been growing in the mid-teens on average over the last five years, exceeding long-term expectations [37] Company Strategy and Development Direction - The company focuses on niche categories where brands can compete successfully over the long term, emphasizing brand building and consumer insights [2][8] - The management plans to utilize free cash flow for mergers and acquisitions (M&A), share repurchases, and maintaining a strong balance sheet [41][42] Management's Comments on Operating Environment and Future Outlook - Management acknowledged capacity constraints affecting the Clear Eyes brand but expressed confidence in addressing these issues with new suppliers coming online [47][48] - The company maintains its free cash flow outlook despite adjustments to top-line expectations, indicating resilience in its business model [48] Other Important Information - The company has a strong financial profile characterized by low capital expenditures and a variable cost model, which supports consistent free cash flow generation [40] - The management highlighted the importance of consumer insights in driving product innovation and brand growth [53] Q&A Session Summary Question: What are the kind of valuations the company is seeing? - The company has not observed a meaningful shift in valuations for the brands it targets, emphasizing its competitive advantages over private equity in terms of cost of capital and operational sophistication [59] Question: How does the company view the shift in retail channels? - Management noted that channel shifts are not new and emphasized the importance of adapting marketing strategies to support retail partners across various channels, including drugstores and e-commerce [61][62]

Financial Data and Key Metrics Changes - The company reported a free cash flow of approximately $242 million for the previous year, with an outlook of over $245 million for the current year, indicating a strong financial profile and consistent cash generation [9][48]. - The five-year compound annual growth rates (CAGRs) showed revenue growth of about 3.5%, organic growth of 2.5%, and earnings per share (EPS) growth of nearly 9% [11]. Business Line Data and Key Metrics Changes - The company operates in several categories, with gastrointestinal (GI) being the largest, followed by women's health, eye and ear care, skin care, and analgesics [4][5]. - The company has a diverse portfolio that allows it to manage fluctuations in illness levels effectively, with brands performing variably based on market conditions [6][10]. Market Data and Key Metrics Changes - The e-commerce segment has grown significantly, with online sales increasing from about 4% of total sales five years ago to approximately 16% by the end of the last fiscal year, with two-thirds of that attributed to Amazon [24][25]. - The international business, particularly in Australia, has been growing in the mid-teens, exceeding long-term expectations of mid to high single-digit growth [36]. Company Strategy and Development Direction - The company focuses on investing in niche categories where brands can compete effectively, emphasizing a brand-building playbook that includes understanding consumer insights and agile marketing strategies [2][12]. - The company aims to utilize its strong cash flow for mergers and acquisitions (M&A), share repurchases, and maintaining a low leverage ratio, with a preference for M&A as the primary use of cash [41][42]. Management's Comments on Operating Environment and Future Outlook - Management acknowledged capacity constraints affecting certain brands but expressed confidence in addressing these issues through new supplier agreements and operational adjustments [46][48]. - The company maintains its free cash flow outlook despite adjustments to top-line revenue expectations, indicating resilience in its financial performance [48]. Other Important Information - The company has a disciplined approach to M&A, focusing on acquiring brands with leading positions in niche categories, and has significant acquisition capacity without returning to previous high leverage levels [44][45]. - The company has successfully launched several new products, including Dramamine advanced herbals for kids and Summer's Eve whole body deodorant, which have performed well in their respective markets [31][33]. Q&A Session Summary Question: What are the kind of valuations the company is seeing in the market? - The company has not observed a meaningful shift in valuations for the types of brands it seeks, emphasizing its competitive advantages over private equity in terms of cost of capital and operational sophistication [58][59]. Question: How does the company view the shift in retail channels from traditional drugstores to clubs and retailers? - The company has adapted to channel shifts by developing unique programs for each retail partner and remains committed to supporting brands in the drug channel while also leveraging opportunities in e-commerce and other retail formats [60][62].

Financial Performance & Strategy - FY25 revenues reached $1,137.8 million[69] - The company achieved a 5-year revenue CAGR of 34%[17,69] - Adjusted EPS 5-year CAGR was +88%[17] - Organic revenue 5-year CAGR was +24%[17,69] - Adjusted FY25 Free Cash Flow reached $243291 thousand[49,75] - Net leverage was significantly reduced to 24x[49] - The company anticipates approximately $1 billion total Free Cash Flow over the next four years[51] E-commerce & International Expansion - E-commerce as a percentage of net sales has increased +4x from approximately 4% in FY19 to approximately 16% in FY25[33] - International revenue accounts for approximately 16% of Prestige Net Sales in FY25[45] FY26 Outlook - Expected revenue for FY26 is projected to be between $1,100 to $1,115 million[59] - Projected FY26 Non-GAAP Free Cash Flow is $245 million[59,77]

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]

Q1 FY26 Performance - Revenue reached $249.5 million, a 6.6% decrease compared to the previous year[18, 22] - Organic revenue declined by 6.4% year-over-year, primarily due to Clear Eyes supply constraints[17, 24] - Diluted EPS increased by 5.6% to $0.95 compared to the adjusted prior year[11, 17, 18, 22] - Free cash flow was solid at $78 million[11] Financial Metrics - Gross margin improved to 56.2%[11, 22, 24] - EBITDA remained relatively flat at $79.6 million[17, 18, 22] - EBITDA margin increased to 31.9%[22, 24] - A&M expenses accounted for 14.0% of revenue[22, 24] - G&A expenses represented 11.4% of revenue[22, 24] Strategic Initiatives and Outlook - The company entered into an agreement to acquire Pillar5 Pharma for approximately $100 million[11, 25] - The company repurchased approximately 400,000 shares for $35 million[25] - Full-year revenue is projected to be between $1.1 billion and $1.115 billion[28] - Full-year free cash flow is expected to be $245 million or more[28]