Prestige Consumer Healthcare (PBH) FY 2025 Conference September 04, 2025 12:45 PM ET Speaker0Everyone. Thanks for joining us. I'm Ron Lombardi, chairman and CEO of Prestige Consumer Health Care, joined by Christine Sacco, our chief operating and financial officer. So today, we're gonna give an update and talk a bit about our business. I'll start things off, and I'll turn it over to Chris who'll who'll wrap up today's discussion.So with that, let's jump into the the slide that I always like to to present and ...

S e p t e m b e r 4 , 2 0 2 5 Barclays Global Consumer Staples Conference Safe Harbor Disclosure 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, organic revenue growth, diluted EPS, and free cash flow; the Company's reinvestment in Clear Eyes as supply increases; the Company's ability to execute on its brand- building strat ...

Core Insights - Prestige Consumer Healthcare's long-term growth strategy focuses on building strong brands and expanding its brand portfolio through both organic growth and acquisitions [1][10] - The company has seen significant momentum in e-commerce, with sales growing at a double-digit rate and e-commerce now representing a high-teens percentage of total sales, up from approximately 15% the previous year [7][8] - Despite solid revenue growth forecasts, the company faces challenges from long-term debt of $1.01 billion and currency fluctuations that could impact profitability [8][11][12] Financial Performance - Prestige Consumer's stock has increased by 30.9% over the past year, outperforming the industry and S&P 500, both of which grew by 9.1% [2] - The company has a market capitalization of $4.23 billion and an earnings yield of 5.6%, significantly higher than the industry's 0.6% yield [2] - The Zacks Consensus Estimate for fiscal 2026 earnings per share is $4.77, with revenues projected at $1.15 billion, indicating a 0.9% increase from the previous year [13] Brand and Product Strategy - The company emphasizes targeted brand-building and innovation, particularly in niche consumer healthcare categories, which supports its market share leadership [4] - Recent product innovations include new flavors for Hydralyte and the Monistat Maintain Kit, aimed at enhancing consumer engagement [5][10] - Acquisitions, such as TheraTears and Hydralyte, have diversified the product portfolio, providing multiple growth sources and minimizing the impact of category-specific slowdowns [10] E-Commerce and Digital Strategy - E-commerce sales growth is driven by brand-specific digital strategies, including website refreshes and engaging content, which enhance consumer education and retention [7][9] - The company is expanding its digital channels internationally while maintaining strong profitability across all sales channels [8][9] Debt and Currency Risks - Prestige Consumer's long-term debt of $1.01 billion and a cash position of $98 million indicate a moderately leveraged debt-to-capital ratio of 35.6% [11] - Currency fluctuations pose a risk, as approximately 15.6% of revenues come from international markets, potentially affecting pricing and costs [12]

Core Viewpoint - Prestige Consumer (PBH) has shown strong momentum with a 35.7% increase in share price over the past year, outperforming the industry growth of 7.9% and the S&P 500's 9.3% increase, indicating solid fundamentals and growth opportunities for investors [1] Company Overview - Prestige Consumer develops, manufactures, markets, sells, and distributes over-the-counter (OTC) healthcare and household cleaning products across the United States, Canada, Australia, and other international markets, including e-commerce channels [2] - The company operates through two segments: North American OTC Healthcare and International OTC Healthcare, with major brands including BC, Goody's, Chloraseptic, and Dramamine [3] Factors Favoring Share Price Growth - The upward trend in PBH's share price is supported by a diverse portfolio of well-recognized consumer brands, with significant contributions from the Gastrointestinal (GI) and Women's Health categories in fiscal 2025 [4] - The company is experiencing impressive growth in the e-commerce channel, reflecting a long-term trend of increasing online purchases [4] - Strategic acquisitions, including TheraTears and Hydralyte, are viewed positively by investors, enhancing PBH's product offerings in the VMS and Cough & Cold categories [5] - PBH's focus on brand building and product innovation has allowed its brands to maintain a leading market share, with Hydralyte's expansion into international markets exemplifying this strategy [6] Market Position and Brand Strength - The Fleet brand, a leader in the rectal laxative category, holds over 50% market share and is expanding into adjacent categories [7] - The women's health franchise is represented by leading brands Monistat and Summer's Eve, contributing to PBH's strong market position [7] Financial Estimates - The Zacks Consensus Estimate for PBH's fiscal 2026 EPS has increased by 0.2% to $4.77, with an earnings yield of 5.6% compared to the industry's 0.6% [11]

Financial Data and Key Metrics Changes - The company reported net revenue of over $1,100,000,000 for fiscal year 2025, an increase of just over 1% compared to the prior year [6][7] - Adjusted EPS for the year was $4.52, up approximately 7% from the previous year [7][23] - Q4 revenue reached $296,500,000, a 7% increase year-over-year, with adjusted diluted EPS of $1.32, up from $1.20 in the prior year [18][19] Business Line Data and Key Metrics Changes - The North America segment saw broad-based growth, particularly in the women's health and GI categories, with brands like Summer's Eve and Dramamine performing well [18][20] - The international segment grew by 7.1% excluding foreign exchange impacts, driven by the Hydralyte brand [18][20] - E-commerce sales continued to grow at a double-digit rate, now representing high teens as a percentage of total sales [20][21] Market Data and Key Metrics Changes - The international segment experienced solid growth, particularly in Australia, contributing to overall performance [20] - E-commerce remains the fastest-growing channel, with shipment growth accelerating in Q4 [20][21] Company Strategy and Development Direction - The company emphasizes a diversified portfolio of brands to navigate market challenges and capitalize on growth opportunities [6][28] - A disciplined capital allocation strategy is in place, focusing on M&A opportunities, share repurchases, and maintaining cash reserves for future investments [25][26] - The company plans to continue leveraging its marketing agility to adapt to changing consumer preferences and market conditions [8][62] Management's Comments on Operating Environment and Future Outlook - Management highlighted ongoing challenges from tariffs, supply chain constraints, and inflation, which could impact consumer spending [5][28] - The outlook for fiscal 2026 anticipates revenues between $1,000,000,001.40 and $1,000,000,001.55, with organic growth expected at 1% to 2% [31][32] - The company expects to maintain gross margin expansion despite tariff impacts, projecting a gross margin of approximately 56.5% [21][33] Other Important Information - The company generated $243,000,000 in free cash flow for fiscal 2025, up approximately 2% from the prior year [24] - The leverage ratio improved to 2.4 times, providing strategic flexibility for capital deployment [25][26] Q&A Session Summary Question: Organic sales growth guidance of 1% to 2% - Management acknowledged macroeconomic volatility and the timing of e-commerce orders as factors influencing the guidance [35][36] Question: Recovery expectations for Clear Eyes - Management confirmed plans to expand capacity with existing suppliers and bring on new suppliers, expecting recovery in the second half of fiscal 2026 [39][41] Question: Women's health category growth outlook - Management expressed confidence in the growth of Summer's Eve and Monistat, citing successful marketing and new product launches [45][47] Question: Capital allocation strategy with reduced leverage - Management indicated a balanced approach to capital allocation, focusing on M&A opportunities while also considering share repurchases [52][54] Question: Consumer uncertainty and marketing plans - Management plans to adapt marketing strategies based on evolving consumer preferences, emphasizing the importance of needs-based products [60][62] Question: Tariff impacts and cost-saving measures - Management confirmed the $15,000,000 tariff headwind and outlined plans to mitigate costs through supplier collaboration and potential pricing adjustments [64][66] Question: E-commerce growth internationally - Management noted that e-commerce growth is primarily US-centric, with less growth observed in other markets [68] Question: Opportunities for domestic suppliers - Management is exploring opportunities for domestic sourcing to mitigate tariff impacts, particularly from China [74][76] Question: Innovation and new product launches - Management indicated a steady approach to innovation, focusing on margin-accretive products without targeting a specific percentage of sales from new products [78][80]

Financial Data and Key Metrics Changes - The company reported net revenue of over $1,100 million, an increase of just over 1% compared to the prior year [6] - Adjusted EPS reached $4.52, up approximately 7% year-over-year [7][23] - Total company gross margin was 55.8% for fiscal 2025, up 30 basis points from the prior year, with Q4 gross margin improving to approximately 57% [21] Business Line Data and Key Metrics Changes - North America segment revenues increased by 30 basis points, while international segment revenues grew by 6.4% [20] - The women's health category, particularly the Summer's Eve brand, showed stabilization and growth, marking the second consecutive quarter of year-over-year sales growth [6][20] - The GI category, led by brands like Dramamine and Fleet, continued to experience strong performance [6][20] Market Data and Key Metrics Changes - The international segment experienced growth in excess of 5%, driven by strong performance in Australia, particularly with the Hydralyte brand [20] - E-commerce sales grew at a double-digit rate, now representing high teens as a percentage of total sales [20] Company Strategy and Development Direction - The company emphasized a disciplined capital allocation strategy, focusing on M&A opportunities, share repurchases, and building cash reserves [26] - A multi-year pipeline of new product development is in place to ensure continuous innovation and meet consumer needs [13][15] - The company plans to leverage its diverse and predominantly domestic supplier base to navigate tariff impacts and inflationary pressures [31] Management's Comments on Operating Environment and Future Outlook - Management acknowledged heightened market volatility and consumer uncertainty due to tariffs and inflation, but expressed confidence in the company's ability to navigate these challenges [29][30] - For fiscal 2026, the company anticipates revenues between $1,000 million and $1,055 million, with organic growth forecasted at approximately 1% to 2% [32] Other Important Information - The company generated $243 million in free cash flow for fiscal 2025, up approximately 2% from the prior year [24] - The company plans to maintain a gross margin of approximately 56.5% for both fiscal 2026 and Q1 [21] Q&A Session Summary Question: Clarification on organic sales growth guidance - Management indicated that the guidance reflects macroeconomic uncertainties and the timing of e-commerce orders, which were pulled forward [36][37] Question: Recovery expectations for Clear Eyes - Management confirmed ongoing supply chain plans to expand capacity and expects a recovery in the second half of fiscal 2026 [40][41] Question: Outlook for women's health brands - Management expressed confidence in the growth potential of Summer's Eve and Monistat, supported by successful marketing and new product launches [46][48] Question: Capital allocation strategy and M&A opportunities - Management highlighted a balanced approach to capital allocation, focusing on M&A opportunities while also considering share repurchases [52][55] Question: Impact of consumer uncertainty on innovation and marketing - Management noted that needs-based categories tend to be resilient during economic uncertainty, and they will adapt marketing strategies to align with consumer preferences [60][62] Question: Tariff impacts and cost-saving measures - Management confirmed the $15 million tariff headwind and outlined plans to implement cost-saving measures while considering surgical pricing if necessary [64][66] Question: E-commerce growth internationally - Management stated that e-commerce growth remains primarily US-centric, with less growth observed in other markets [68] Question: Opportunities for domestic suppliers - Management is exploring opportunities for domestic sourcing to mitigate tariff impacts, particularly concerning products sourced from China [74][75] Question: Innovation pipeline and margin profile - Management indicated a steady impact from new products and emphasized that all innovations must be margin-accretive [77][79]

Core Insights - Prestige Consumer Healthcare Inc. reported strong financial results for the fourth quarter and fiscal year ended March 31, 2025, with record sales driven by international business strength and eCommerce growth [2][3][6] - The company achieved a 7.0% increase in fourth-quarter revenues to $296.5 million compared to $277.0 million in the same quarter of the previous year, with a 7.9% organic revenue growth [3][8] - Fiscal year 2025 revenues totaled $1,137.8 million, reflecting a 1.1% increase from $1,125.4 million in fiscal year 2024, with notable growth in the Gastrointestinal category [6][7] Financial Performance - Fourth-quarter net income was reported at $50.1 million, up from $49.5 million in the prior year, with diluted earnings per share (EPS) of $1.00 compared to $0.98 [4][7] - For fiscal year 2025, net income reached $214.6 million, an increase from $209.3 million in the previous year, with diluted EPS of $4.29 compared to $4.17 [7][8] - Non-GAAP adjusted net income for the fourth quarter was $65.9 million, up from $51.4 million in the prior year, leading to an adjusted diluted EPS of $1.32 compared to $1.02 [4][8] Segment Performance - North American OTC Healthcare segment revenues for the fourth quarter were $248.9 million, a 7.7% increase from $231.1 million in the prior year, driven by growth in GI and Women's Health categories [13][14] - International OTC Healthcare segment revenues for the fourth quarter were $47.6 million, a 3.7% increase from $45.9 million in the prior year, with strong performance from the Hydralyte brand [15][16] Cash Flow and Capital Allocation - The company generated $61.8 million in net cash from operating activities in the fourth quarter, down from $66.9 million in the prior year, with non-GAAP free cash flow of $58.4 million compared to $63.8 million [10][11] - For fiscal year 2025, net cash provided by operating activities was $251.5 million, slightly up from $248.9 million in the previous year, with non-GAAP free cash flow increasing by 1.6% to $243.3 million [11][12] Outlook - The company anticipates organic revenue growth of approximately 1% to 2% and diluted EPS in the range of $4.70 to $4.82 for fiscal year 2026, despite facing inflationary pressures from tariffs [17][18] - The initial revenue outlook for fiscal 2026 is projected between $1,140 million and $1,155 million, with free cash flow expected to exceed $245 million [18]

Core Insights - Prestige Consumer Healthcare Inc. reported strong financial results for the fourth quarter and fiscal year ended March 31, 2025, with record sales driven by international business strength and eCommerce growth [2][3][6]. Financial Performance - Fourth quarter revenues reached $296.5 million, a 7.0% increase from $277.0 million in the same quarter of the previous year, with a 7.9% increase when excluding foreign currency impacts [3][6]. - Fiscal year 2025 revenues totaled $1,137.8 million, up 1.1% from $1,125.4 million in fiscal year 2024, with a 1.2% increase excluding foreign currency effects [6][7]. - Net income for the fourth quarter was $50.1 million, compared to $49.5 million in the prior year, while diluted earnings per share (EPS) increased to $1.00 from $0.98 [4][7]. - For fiscal year 2025, reported net income was $214.6 million, up from $209.3 million, with diluted EPS rising to $4.29 from $4.17 [7][8]. Segment Performance - North American OTC Healthcare segment revenues for Q4 were $248.9 million, a 7.7% increase from $231.1 million in the prior year, driven by growth in GI and Women's Health categories [13][14]. - International OTC Healthcare segment revenues for Q4 were $47.6 million, a 3.7% increase from $45.9 million, with significant growth attributed to the Hydralyte brand [15][16]. Cash Flow and Capital Allocation - The company generated $61.8 million in net cash from operating activities in Q4, down from $66.9 million in the prior year, while non-GAAP free cash flow was $58.4 million, a decrease from $63.8 million [10][11]. - For the fiscal year, net cash provided by operating activities was $251.5 million, slightly up from $248.9 million, with non-GAAP free cash flow increasing by 1.6% to $243.3 million [11][12]. Shareholder Returns and Debt Management - The company repurchased approximately 0.7 million shares for about $51.5 million during fiscal 2025, reducing net debt to approximately $0.9 billion, resulting in a leverage ratio of 2.4x [12][18]. - The company plans to maintain a disciplined capital allocation approach, focusing on share repurchases, M&A, and deleveraging [2][8]. Fiscal 2026 Outlook - The company anticipates organic revenue growth of approximately 1% to 2% and diluted EPS in the range of $4.70 to $4.82 for fiscal 2026, despite facing inflationary headwinds from tariffs [17][18].

Core Insights - Prestige Consumer Healthcare (PBH) is focused on brand building and portfolio expansion through strategic acquisitions, which is expected to drive growth in upcoming quarters [1][5] - The company has experienced a share price increase of 19.3% over the past year, outperforming the industry and S&P 500 [1] Company Overview - PBH has a market capitalization of $4.17 billion and reported an earnings surprise of 5.17% in the last quarter [2] - The earnings yield for PBH stands at 5.4%, significantly higher than the industry's 0.3% [2] Growth Drivers - The strength of PBH's diversified portfolio, which includes well-recognized consumer brands, has contributed to sales growth and long-term profitability, with core brands generating nearly 58.6% of total revenues in fiscal 2024 [3] - The gastrointestinal (GI) product category is a significant contributor, accounting for nearly 20% of North American sales, with brands like Dramamine, Fleet, and Gaviscon leading the category [4] - The company is also seeing growth in the e-commerce channel, reflecting a long-term trend towards online purchases [4] Strategic Acquisitions - PBH has expanded its brand portfolio through both organic growth and acquisitions, including the purchase of TheraTears and other over-the-counter brands from Akorn Operating Company LLC, as well as Hydralyte from Hydration Pharmaceuticals Trust [5] Financial Concerns - As of the end of the fiscal third quarter, PBH had a long-term debt of $996 million and cash and cash equivalents of $51 million, with a debt-to-capital ratio of 35.8% [7] - The company generated approximately 14.8% of its fiscal 2024 revenues from international business, making it susceptible to currency fluctuations [9] Earnings Estimates - The Zacks Consensus Estimate for PBH's fiscal 2025 earnings per share has increased by 0.4% to $4.52, with revenue estimates at $1.13 billion, reflecting a 0.5% increase from the previous year [10]