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.

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]

Prestige Consumer Healthcare Conference Summary Company Overview - Prestige Consumer Healthcare Inc. (NYSE: PBH) is a consumer healthcare company focused on over-the-counter medicines, helping consumers care for themselves daily [2][3] Key Business Segments - The company has a diversified portfolio of brands, including: - Monistat (50%+ market share in vaginal antifungal treatment) - Summer's Eve (40%+ market share in feminine hygiene) - Dramamine (60% market share in motion sickness) [4][5][10] Financial Performance - Over the last five years, total revenue grew by approximately 3.5%, with organic revenue growth in the range of 2% to 3% [9] - Adjusted earnings increased by about 9% annually, exceeding the long-term target of 6% to 8% [9] - The company maintains best-in-class EBITDA margins in the low 30s, contributing to strong free cash flow generation [7][22] Growth Strategy - The growth strategy is built on three pillars: 1. Investing in brand building to achieve 2% to 3% organic growth [6] 2. Maintaining a strong financial profile with an asset-light model and high free cash flow [7] 3. Reinvesting free cash flow into capital allocation for further growth and potential acquisitions [8][22] E-commerce Growth - E-commerce sales have increased from less than 1% to over 16% of total sales in the last five years, driven by investments in content and marketing [15][16] - The company aims to be channel-agnostic, ensuring products are available across various platforms [40] Innovation and Brand Building - The company introduces 3 to 5 new products annually, focusing on incremental innovations rather than large-scale launches [17] - Recent innovations include expanding the Dramamine brand to include non-drowsy options and nausea relief products [11][12] - The introduction of a maintain subline for Monistat allows for broader usage beyond acute treatment [19] International Expansion - The international segment accounts for about 16% of sales, with expected growth rates exceeding 5% [20] - Key brands include Hydralyte, a leading rehydration product in Australia, with plans for geographic expansion [20][21] Capital Allocation Strategy - The company prioritizes: 1. Investing in current brands for organic growth 2. M&A opportunities to consolidate consumer healthcare brands 3. Strategic share repurchases to offset dilution [23][24] - The company has a long-term leverage target of less than 3 times, currently at 2.4x [22] Challenges and Future Outlook - The Clear Eyes brand faced supply chain challenges, leading to a shortfall in revenue. The company is acquiring a critical supplier to enhance production capacity [26][32] - The long-term outlook remains positive, with expectations for continued free cash flow generation and strategic capital allocation to enhance shareholder value [26][27] Conclusion - Prestige Consumer Healthcare is well-positioned for sustainable growth through a diversified brand portfolio, strong financial management, and a focus on innovation and market expansion [27]

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].

Core Insights - Prestige Consumer Healthcare Inc. reported a revenue of $249.5 million for the first quarter of fiscal 2026, a decrease of 6.6% from $267.1 million in the same period last year, primarily due to supply constraints in the Clear Eyes product line [3][10] - The company announced an acquisition of Pillar5 Pharma to enhance its eye care production capacity, which is expected to be neutral to earnings per share (EPS) and close in the third quarter of fiscal 2026 [10][11] - The updated fiscal 2026 revenue outlook is revised to $1,100 to $1,115 million, with diluted EPS expected to be between $4.50 and $4.58 [14][16] Financial Performance - Reported net income for the first quarter of fiscal 2026 was $47.5 million, down from $49.1 million in the prior year, with diluted EPS of $0.95 compared to $0.98 in the same period last year [4][10] - Free cash flow for the first quarter increased to $78.2 million from $53.6 million in the prior year, attributed to improved working capital timing and lower interest expenses [6][10] - The company's net cash provided by operating activities was $79.0 million, compared to $54.8 million in the prior year [6][10] Segment Performance - North American OTC Healthcare segment revenues decreased to $212.6 million from $232.3 million year-over-year, primarily due to lower sales in the Eye & Ear Care category [8][29] - International OTC Healthcare segment revenues increased by 6.1% to $37.0 million, driven by broad-based growth across various geographies [9][29] Strategic Initiatives - The acquisition of Pillar5 Pharma is part of a long-term strategy to secure supply and enhance production capacity for eye care products, addressing current supply chain challenges [10][13] - The company aims to leverage its diverse portfolio and strong financial profile to drive long-term shareholder value [2][14]