Profitability metrics were largely in line with expectations previously communicated. Lombardi said gross margin was 55.5% and adjusted diluted EPS was $1.14, consistent with guidance given on the company’s second-quarter call. Sacco said adjusted diluted EPS declined from $1.22 in the prior-year quarter due to lower sales, the timing of advertising and marketing spending, and higher G&A costs.Management characterized the consumer backdrop as challenging and dynamic, citing ongoing changes in where consumer ...

Financial Data and Key Metrics Changes - Q3 revenue was $283 million, slightly better than forecast but down 2.4% from $290.3 million in the prior year, primarily due to lower eye and ear care category sales [5][12] - Adjusted EPS was $1.14, down from $1.22 in the prior year, reflecting lower sales and increased G&A costs [7][12] - Free cash flow for the year to date was $209 million, up 13% versus the prior year, allowing for stock repurchases and acquisitions [7][18] Business Line Data and Key Metrics Changes - Sales declines were largely due to anticipated Clear Eyes supply chain constraints, with North America segment revenues down 4.4% and international segment revenues down 90 basis points [14][16] - E-commerce channels showed strong growth, offsetting declines in other categories like analgesics and cough and colds [14][15] Market Data and Key Metrics Changes - The company continues to see consumption growth in e-commerce, with over 10% growth in Q3 [35] - The eye care category is expected to improve sequentially, driven by an aging population and strategic actions taken to enhance supply [8][10] Company Strategy and Development Direction - The company is focused on a disciplined capital allocation strategy, including share repurchases and potential M&A opportunities to enhance its portfolio [19][20] - The acquisition of Pillar Five is expected to improve supply chain control and production capabilities for eye care products [9][10] Management's Comments on Operating Environment and Future Outlook - Management noted heightened business environment uncertainty due to supply chain constraints, high inflation, and geopolitical events [4] - The company has narrowed its sales outlook for fiscal 2026 to approximately $1.1 billion, reflecting consumption momentum in growth channels but slower order patterns in others [21] Other Important Information - The company anticipates a full-year G&A of just over 10% as a percent of sales, with adjusted diluted EPS expected to be approximately $4.54 for the year [17][21] - The company has maintained a strong financial position with a net debt of approximately $1 billion and a leverage ratio of 2.6x [18] Q&A Session Summary Question: Are you seeing consumption shift to other retailers? - Management confirmed a continuation of channel shifts, with consumption picking up based on where consumers purchase products [24] Question: When do you expect the headwinds to go away? - Management indicated it is difficult to predict, but they are well-positioned to manage through the volatility [26] Question: What is the status of the eye care supply? - Management noted that restocking will take time, but they expect sequential improvement in supply [33] Question: How is the e-commerce penetration performing? - E-commerce consumption grew over 10% in Q3, with management noting the importance of adapting marketing strategies to connect with consumers [35] Question: What is the outlook for the women's health business? - Management reported that Monistat is performing well, while Summer's Eve is positioned for long-term growth despite some volatility [39] Question: What is the capital allocation strategy moving forward? - Management emphasized that investing in brands is the top priority, with share repurchases being a secondary focus based on market conditions [44]

Financial Data and Key Metrics Changes - Q3 revenue was $283 million, slightly better than forecast but down 2.4% from $290.3 million in the prior year, primarily due to lower eye and ear care category sales [5][12] - Adjusted EPS was $1.14, down from $1.22 in the prior year, reflecting lower sales and increased costs [7][12] - Free cash flow was $209 million year to date, up 13% versus the prior year, allowing for stock repurchases and acquisitions [7][18] Business Line Data and Key Metrics Changes - Sales declines were largely due to Clear Eyes supply constraints, impacting the eye care category [12][14] - Strong growth was observed in e-commerce channels, offsetting declines in other categories like analgesics and cough and colds [15][21] - The women's health segment showed volatility, with Monistat performing well while Summer's Eve faced challenges [39] Market Data and Key Metrics Changes - North America segment revenues decreased 4.4%, while international segment revenues decreased 90 basis points [14] - E-commerce consumption grew over 10% in Q3, indicating a shift in consumer purchasing behavior [35] Company Strategy and Development Direction - The company is focused on improving Clear Eyes supply through strategic actions, including acquiring Pillar5 and adding new suppliers [9][10] - A disciplined capital allocation strategy is in place, prioritizing investments in brands, M&A, and share repurchases [19][20] - The company anticipates a revenue forecast of approximately $1.1 billion for fiscal 2026, reflecting consumption momentum in growth channels [21] Management's Comments on Operating Environment and Future Outlook - Management noted heightened business environment uncertainty due to supply chain constraints, high inflation, and geopolitical events [4] - Confidence remains in the core business, with expectations for free cash flow growth for the fiscal year [8][21] - Sequential improvement in Clear Eyes supply is anticipated, contributing to a positive outlook for the next fiscal year [21] Other Important Information - The company experienced a $10 million write-off related to a supplier loan, which was secured by the supplier's assets [12][13] - Adjusted gross margin for the first nine months was 55.7%, up 50 basis points from the prior year [16] Q&A Session Summary Question: Are consumers shifting to other retailers? - Management confirmed a continuation of channel shifts, with consumption patterns adapting to where consumers choose to shop [24][25] Question: When might the headwinds subside? - Management indicated that it is difficult to predict, as volatility has been high, but they are well-positioned to manage through it [26] Question: Update on eye care supply and margins? - Management expects sequential improvement in Clear Eyes supply but noted that restocking will take time; margins are expected to remain stable [33][34] Question: E-commerce growth and penetration? - E-commerce consumption grew over 10% in Q3, with management noting the importance of adapting marketing strategies to connect with consumers [35][36] Question: Capital allocation and stock repurchases? - Management emphasized that investing in brands is the top priority, but they are also evaluating M&A opportunities while repurchasing shares at attractive levels [44][45] Question: Sales outlook for the fourth quarter? - Management explained that the sales guidance reflects order patterns observed in Q3, with consumption remaining strong [50][51] Question: Future M&A focus? - Management indicated that future M&A will primarily focus on brands and long-term brand building value [69]

Financial Data and Key Metrics Changes - Q3 revenue was $283 million, a decline of 2.4% from $290.3 million in the prior year, primarily due to lower eye and ear care category sales attributed to Clear Eyes supply constraints [10][12] - Adjusted EPS was $1.14, down slightly from $1.22 in the prior year, reflecting lower sales and increased G&A costs [10][15] - Free cash flow for the year to date was $209 million, up 13% compared to the previous year [5][10] Business Line Data and Key Metrics Changes - Sales declines were largely due to anticipated impacts from Clear Eyes supply chain constraints, with North America segment revenues decreasing 4.4% and international segment revenues down 90 basis points [12][13] - E-commerce channels showed strong growth, offsetting declines in other categories like analgesics and cough and colds [12][19] Market Data and Key Metrics Changes - The company continues to see positive consumption trends in e-commerce, with consumption growth over 10% in Q3 [34] - The eye care category is expected to see sequential improvements in supply, driven by strategic actions taken, including the acquisition of Pillar Five [6][8] Company Strategy and Development Direction - The company is focused on a disciplined capital allocation strategy, enhancing shareholder value through stock repurchases and strategic acquisitions [5][17] - The acquisition of Pillar Five is expected to improve supply chain control and production capabilities for eye care products [7][8] Management's Comments on Operating Environment and Future Outlook - Management noted heightened business environment uncertainty due to supply chain constraints, high inflation, and geopolitical events [3] - The company has narrowed its sales outlook for fiscal 2026 to approximately $1.1 billion, reflecting consumption momentum in growth channels but offset by slower order patterns in others [19] Other Important Information - The company anticipates a full-year G&A of just over 10% as a percentage of sales, with adjusted diluted EPS expected to be approximately $4.54 for the year [15][19] - The company has repurchased over $150 million in shares year to date, nearly 5% of shares outstanding [17] Q&A Session Summary Question: Are you seeing consumption shift to other retailers? - Management confirmed a continuation of channel shifts, with consumption picking up based on where consumers purchase products [22][24] Question: When might the headwinds go away? - Management indicated it is difficult to predict, but they are well-positioned to manage through the volatility [25] Question: Update on eye care supply and margins? - Management expects sequential improvement in Clear Eyes supply, with stable margins anticipated as the business normalizes [30][32] Question: E-commerce growth and penetration? - E-commerce consumption grew over 10% in Q3, with management noting the importance of aligning marketing initiatives with consumer shopping behavior [34][35] Question: Update on women's health business? - Monistat is performing well, while Summer's Eve is positioned for long-term growth despite some volatility [36][37] Question: Capital allocation and stock buybacks? - Management emphasized the importance of investing in brands while also evaluating M&A opportunities, with stock buybacks being a secondary focus [42][44] Question: Sales outlook for Q4? - Management indicated that the sales guidance reflects order patterns seen in Q3, with consumption remaining strong [47][48] Question: Expectations for fiscal 2027? - Management expressed confidence in base business performance and anticipated improvements in supply conditions for Clear Eyes [52][53]

Prestige Consumer Healthcare (NYSE:PBH) FY Conference Summary Company Overview - **Company**: Prestige Consumer Healthcare - **Date**: January 13, 2026 - **Key Speakers**: CEO Ron Lombardi, CFO Chris Sacco, VP of IR and Treasury Phil Terpolilli Industry Context - The year 2025 was marked by significant external events including a new administration, tariffs, and government shutdowns, impacting consumer behavior and purchasing decisions [2][2] - The healthcare products industry remains resilient as consumers prioritize health-related purchases regardless of economic conditions [2][2] Core Business Insights - **Product Portfolio**: Prestige Consumer Healthcare offers a diverse range of health products, which are essential for treating illnesses, positioning the company well during economic fluctuations [2][2] - **Brand Strategy**: The company focuses on building and growing product categories through innovation rather than merely competing for market share [4][4] - **Innovation Examples**: The introduction of non-drowsy Dramamine and ginger chews for nausea exemplifies the company's strategy to expand product offerings and cater to consumer needs [6][7] Financial Performance - **Gross Margin Impact**: The company faced challenges with gross margins due to tariffs and disruptions in the eye care business, with tariffs costing approximately $5 million in fiscal 2026 [19][19] - **EBITDA Margin**: The company maintains a strong EBITDA margin of 33%-34%, indicating robust profitability despite margin pressures [21][21] Distribution Channels - The company has a broad distribution strategy, successfully adapting to consumer shopping preferences, particularly with growth in mass retail and e-commerce channels [13][14] - The Amazon business continues to grow at double-digit rates, while traditional drug and regional grocery channels are experiencing declines [14][14] M&A and Capital Allocation Strategy - **M&A Focus**: The company is actively seeking acquisition opportunities in the fragmented consumer healthcare market, with a disciplined approach to evaluating potential brands [25][29] - **Capital Allocation**: The company plans to balance M&A, share repurchases, and cash build, expecting to generate $1 billion in free cash flow over the next four years [26][26] International Business - The international segment has been performing well, contributing over 10% of total revenue, with brands like Hydralite and FESS showing strong growth [32][32] Private Label Competition - The company acknowledges the presence of private label products but emphasizes its focus on niche brands with strong consumer trust, which helps mitigate the impact of private label competition [37][38] Women's Health Segment - Brands like Monistat and Summer's Eve are positioned for growth, with Monistat achieving a market share of approximately 55% [41][41][42] Conclusion - Prestige Consumer Healthcare is well-positioned for future growth through a diversified product portfolio, strong brand strategies, and a proactive approach to market changes and consumer needs. The company remains focused on innovation and strategic acquisitions to enhance its market presence and profitability.

Core Insights - Prestige Consumer Healthcare (PBH) is experiencing strong momentum in the e-commerce channel due to long-term investments and brand-specific digital strategies [1][10] - The company has expanded its brand portfolio through both organic growth and acquisitions, including a recent agreement to acquire Pillar5 Pharma Inc. to enhance its eye care product offerings [4][10] - Despite a stable solvency position, the company faces challenges from a dull macroeconomic environment, including inflationary pressures and supply chain disruptions [11] Financial Performance - Over the past year, PBH's stock has declined by 9.1%, contrasting with the industry's growth of 1.4% and the S&P 500's increase of 18.7% [2] - The company has a market capitalization of $2.97 billion and an earnings yield of 7.3%, significantly higher than the industry's 0.2% yield [2] - PBH has surpassed earnings estimates in three of the last four quarters, with an average surprise of 2.8% [2] Growth Drivers - The acquisition of Pillar5 Pharma is expected to close in the third quarter of fiscal 2026, with minimal ongoing capital expenditure requirements [5][10] - E-commerce sales have shown double-digit growth year-over-year, representing a high-teens percentage of total sales in fiscal 2025, up from approximately 15% the previous year [6][10] - Brand-specific digital strategies have enhanced consumer engagement and retention, with ongoing investments in digital marketing positioning the company for sustained success [7] Solvency and Cost Challenges - As of the end of the second quarter of fiscal 2026, PBH reported no short-term debt and had $119 million in cash and cash equivalents, indicating stable solvency [8][10] - The company anticipates approximately $5 million in tariff costs for fiscal 2026 due to ongoing economic volatility and is implementing cost-saving initiatives to mitigate these impacts [11] Earnings Estimates - The Zacks Consensus Estimate for PBH's fiscal 2026 earnings per share remains unchanged at $4.755, while revenues are projected at $1.11 billion, reflecting a decrease of 2.8% from the previous year [12]

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]