Bay Street News

Prestige Consumer Healthcare Inc. Reports Second Quarter and First Half Fiscal 2025 Results

TARRYTOWN, N.Y., Nov. 07, 2024 (GLOBE NEWSWIRE) — Prestige Consumer Healthcare Inc. (NYSE:PBH) today reported financial results for its second quarter and first six months ended September 30, 2024.

“Our second quarter results exceeded our sales and earnings expectations thanks to the strength of our diverse portfolio of market-leading brands and the benefits of our disciplined capital deployment strategy. Second quarter revenues were stronger than expected, primarily due to solid growth in our International and Canadian businesses, which largely offset Clear Eyes® supply constraints. In addition, strong double-digit free cash flow growth enabled us to repurchase additional shares in the second quarter and continue reducing debt and leverage,” said Ron Lombardi, Chief Executive Officer of Prestige Consumer Healthcare.

Second Fiscal Quarter Ended September 30, 2024

Reported revenues in the second quarter of fiscal 2025 of $283.8 million decreased 0.9% from $286.3 million in the second quarter of fiscal 2024. The revenue performance versus the prior year comparable period reflected anticipated limited ability to supply strong demand for Clear Eyes as well as declines in the Cough & Cold and Analgesic categories, partially offset by continued strong growth in the International OTC segment.

Reported net income for the second quarter of fiscal 2025 totaled $54.4 million compared to the prior year second quarter of $53.6 million. Diluted earnings per share of $1.09 for the second quarter of fiscal 2025 compared to $1.07 in the prior year comparable period.

Six Months Ended September 30, 2024

Reported revenues for the first six months of fiscal 2025 totaled $550.9 million and compared to revenues of $565.6 million for the first six months of fiscal 2024. Revenues decreased 2.6% versus the prior year comparable period. The revenue performance for the first six months reflected the anticipated limited ability to supply strong demand for Clear Eyes and declines in the Cough & Cold and Women’s Health categories, partially offset by continued strong growth in the International OTC segment.

Reported net income for the first six months of fiscal 2025 totaled $103.4 million, or $99.4 million on a non-GAAP adjusted basis, versus the prior year comparable period net income of $106.8 million. Diluted earnings per share and non-GAAP adjusted diluted earnings per share were $2.06 and $1.98, respectively, for the first six months of fiscal 2025, compared to diluted earnings per share of $2.13 in the prior year comparable period.

The adjustment to the first six months of fiscal 2025 relates to a discrete tax item in the first quarter pertaining to the release of a reserve for an uncertain tax position due to the statute of limitations expiring.

Free Cash Flow and Balance Sheet

The Company’s net cash provided by operating activities for second quarter fiscal 2025 was $69.8 million, an increase compared to $62.5 million during the prior year comparable period. Non-GAAP free cash flow in the second quarter of fiscal 2025 of $67.8 million increased compared to $59.5 million in the prior year second quarter. The Company’s net cash provided by operating activities for the first six months of fiscal 2025 was $124.6 million, compared to $110.5 million during the prior year comparable period. Non-GAAP free cash flow in the first six months of fiscal 2025 was $121.4 million compared to $106.1 million in the prior year comparable period.

In the second quarter fiscal 2025, the Company repurchased approximately 0.2 million shares at a total investment of approximately $12.0 million. The Company’s net debt position as of September 30, 2024 was approximately $1.0 billion, resulting in a covenant-defined leverage ratio of 2.7x.

Segment Review

North American OTC Healthcare: Segment revenues of $239.8 million for the second quarter fiscal 2025 decreased 1.9% compared to the prior year comparable quarter’s segment revenues of $244.4 million. The anticipated revenue decline reflected the limited ability to fully supply demand for Clear Eyes and declines in the Cough & Cold and Analgesics categories.

For the first six months of the current fiscal year, reported revenues for the North American OTC segment were $472.1 million, which compared to $490.6 million in the prior year comparable period. The change was attributable to lower sales in the Cough & Cold and Women’s Health categories, as well as the limited ability to fully supply demand for Clear Eyes.

International OTC Healthcare: Fiscal second quarter 2025 revenues of $44.0 million increased 5.0% compared to $41.9 million reported in the prior year comparable period, and increased 4.4% excluding the effects of foreign currency. The performance was led by strong growth for the Hydralyte® brand.

For the first six months of the current fiscal year, reported revenues for the International OTC Healthcare segment were $78.8 million, an increase of approximately 5% over the prior year comparable period’s revenues of $75.1 million. The performance was led by strong growth for the Hydralyte® brand.

Commentary and Reaffirmed Outlook for Fiscal 2025

Ron Lombardi, Chief Executive Officer, stated, “Our second quarter results were slightly ahead of revenue and earnings expectations and have us set up well to achieve our previously stated fiscal 2025 outlook for sales, adjusted earnings, and cash flow.”

“We continue to benefit from a diverse portfolio of brands and anticipate second half revenue growth which builds on our first half momentum in the international segment as well as benefitting from continued improvements for the Women’s Health category. We expect these positive trends to more than offset the continued supply constraints for Clear Eyes, where we are working closely with our suppliers to meet the robust long-term demand outlook we see for this brand. Regarding profitability, we’re anticipating full-year adjusted EPS to be at the higher end of our outlook thanks to disciplined capital allocation and strong free cash flows that enabled lower interest expense and shares outstanding.”

“We will continue to execute on our business model that is focused on long-term brand-building and leveraging our cash generation. With this proven strategy and strong balance sheet we are well positioned to maximize shareholder value through disciplined capital deployment,” Mr. Lombardi concluded.

     
  Fiscal 2025 Outlook  
Revenue $1,125 to $1,140 million  
Organic Revenue Growth Approximately 1%  
Adjusted Diluted E.P.S. $4.40 to $4.46  
Free Cash Flow $240 million or more  
     

Fiscal Second Quarter 2025 Conference Call, Accompanying Slide Presentation and Replay

The Company will host a conference call to review its second quarter fiscal 2025 results today, November 7, 2024 at 8:30 a.m. ET. The Company provides a live Internet webcast, a slide presentation to accompany the call, as well as an archived replay, all of which can be accessed from the Investor Relations page of the Company’s website at www.prestigeconsumerhealthcare.com. To participate in the conference call via phone, participants may register for the call here to receive dial-in details and a unique pin. While not required, it is recommended to join 10 minutes prior to the event start. The slide presentation can be accessed from the Investor Relations page of the website by clicking on Webcasts and Presentations.

A conference call replay will be available for approximately one week following completion of the live call and can be accessed on the Company’s Investor Relations page.

Non-GAAP and Other Financial Information

In addition to financial results reported in accordance with generally accepted accounting principles (GAAP), we have provided certain non-GAAP financial information in this release to aid investors in understanding the Company’s performance. Each non-GAAP financial measure is defined and reconciled to its most closely related GAAP financial measure in the “About Non-GAAP Financial Measures” section at the end of this earnings release.

Note Regarding Forward-Looking Statements

This news release contains “forward-looking statements” within the meaning of the federal securities laws that are intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. “Forward-looking statements” generally can be identified by the use of forward-looking terminology such as “guidance,” “outlook,” “momentum,” “may,” “will,” “would,” “expect,” “anticipate,” “trends,” “positioned,” or “continue” (or the negative or other derivatives of each of these terms) or similar terminology. The “forward-looking statements” include, without limitation, statements regarding the Company’s future operating results including revenues, organic growth, adjusted diluted earnings per share, and free cash flow, the Company’s disciplined capital deployment, the Company’s ability to execute on its brand-building strategy, the growth of the International OTC segment, the timing and extent of supply chain challenges, and the Company’s ability to maximize shareholder value. These statements are based on management’s estimates and assumptions with respect to future events and financial performance and are believed to be reasonable, though are inherently uncertain and difficult to predict. Actual results could differ materially from those expected as a result of a variety of factors, including the impact of business and economic conditions, including as a result of labor shortages, inflation and geopolitical instability, consumer trends, the impact of the Company’s advertising and marketing and new product development initiatives, customer inventory management initiatives, fluctuating foreign exchange rates, competitive pressures, and the ability of the Company’s manufacturing operations and third party manufacturers and logistics providers and suppliers to meet demand for its products and to avoid inflationary cost increases and disruption as a result of labor shortages. A discussion of other factors that could cause results to vary is included in the Company’s Annual Report on Form 10-K for the year ended March 31, 2024 and other periodic reports filed with the Securities and Exchange Commission.

About Prestige Consumer Healthcare Inc.

Prestige Consumer Healthcare is a leading consumer healthcare products company with sales throughout the U.S. and Canada, Australia, and in certain other international markets. The Company’s diverse portfolio of brands include Monistat® and Summer’s Eve® women’s health products, BC® and Goody’s® pain relievers, Clear Eyes® and TheraTears® eye care products, DenTek® specialty oral care products, Dramamine® motion sickness treatments, Fleet® enemas and glycerin suppositories, Chloraseptic® and Luden’s® sore throat treatments and drops, Compound W® wart treatments, Little Remedies® pediatric over-the-counter products, Boudreaux’s Butt Paste® diaper rash ointments, Nix® lice treatment, Debrox® earwax remover, Gaviscon® antacid in Canada, and Hydralyte® rehydration products and the Fess® line of nasal and sinus care products in Australia. Visit the Company’s website at www.prestigeconsumerhealthcare.com.

Investor Relations Contact
Phil Terpolilli, CFA, 914-524-6819
irinquiries@prestigebrands.com

       
Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
       
  Three Months Ended
September 30,
  Six Months Ended
September 30,
(In thousands, except per share data) 2024
  2023   2024
  2023
Total Revenues $ 283,785     $ 286,316     $ 550,927     $ 565,625  
               
Cost of Sales              
Cost of sales excluding depreciation   124,041       124,324       242,738       246,978  
Cost of sales depreciation   2,362       1,972       4,785       3,954  
Cost of sales   126,403       126,296       247,523       250,932  
Gross profit   157,382       160,020       303,404       314,693  
               
Operating Expenses              
Advertising and marketing   41,409       40,102       80,774       76,333  
General and administrative   26,067       25,997       54,977       53,684  
Depreciation and amortization   5,567       5,671       11,268       11,232  
Total operating expenses   73,043       71,770       147,019       141,249  
Operating income   84,339       88,250       156,385       173,444  
               
Other expense              
Interest expense, net   12,281       17,606       25,418       35,325  
Other expense (income), net   395       229       891       (1,009 )
Total other expense, net   12,676       17,835       26,309       34,316  
Income before income taxes   71,663       70,415       130,076       139,128  
Provision for income taxes   17,286       16,856       26,631       32,293  
Net income $ 54,377     $ 53,559     $ 103,445     $ 106,835  
               
Earnings per share:              
Basic $ 1.10     $ 1.08     $ 2.08     $ 2.15  
Diluted $ 1.09     $ 1.07     $ 2.06     $ 2.13  
               
Weighted average shares outstanding:              
Basic   49,652       49,687       49,768       49,727  
Diluted   49,998       50,081       50,132       50,138  
               
Comprehensive income, net of tax:              
Currency translation adjustments   4,799       (3,784 )     7,959       (4,430 )
Total other comprehensive income (loss)   4,799       (3,784 )     7,959       (4,430 )
Comprehensive income $ 59,176     $ 49,775     $ 111,404     $ 102,405  
                               
Prestige Consumer Healthcare Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
       
(In thousands) September 30,
2024
  March 31,
2024
       
Assets      
Current assets      
Cash and cash equivalents $ 51,540     $ 46,469  
Accounts receivable, net of allowance of $18,179 and $16,377, respectively   163,547       176,775  
Inventories   156,225       138,717  
Prepaid expenses and other current assets   9,396       13,082  
Total current assets   380,708       375,043  
       
Property, plant and equipment, net   74,920       76,507  
Operating lease right-of-use assets   8,551       11,285  
Finance lease right-of-use assets, net   212       1,541  
Goodwill   529,225       527,733  
Intangible assets, net   2,316,542       2,320,583  
Other long-term assets   6,727       5,725  
Total Assets $ 3,316,885     $ 3,318,417  
       
Liabilities and Stockholders’ Equity      
Current liabilities      
Accounts payable   31,172       38,979  
Accrued interest payable   15,708       15,763  
Operating lease liabilities, current portion   2,560       4,658  
Finance lease liabilities, current portion   91       1,494  
Other accrued liabilities   57,375       56,154  
Total current liabilities   106,906       117,048  
       
Long-term debt, net   1,051,586       1,125,804  
Deferred income tax liabilities   414,865       403,596  
Long-term operating lease liabilities, net of current portion   6,517       7,528  
Long-term finance lease liabilities, net of current portion   126       172  
Other long-term liabilities   5,124       9,185  
Total Liabilities   1,585,124       1,663,333  
       
Total Stockholders’ Equity   1,731,761       1,655,084  
Total Liabilities and Stockholders’ Equity $ 3,316,885     $ 3,318,417  
               
Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
   
  Six Months Ended September 30,
(In thousands) 2024   2023
Operating Activities      
Net income $ 103,445     $ 106,835  
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization   16,053       15,186  
Loss on disposal of property and equipment   83       191  
Deferred and other income taxes   4,364       9,721  
Amortization of debt origination costs   882       2,302  
Stock-based compensation costs   5,559       7,834  
Non-cash operating lease cost   3,430       2,816  
Changes in operating assets and liabilities:      
Accounts receivable   15,191       4,415  
Inventories   (16,471 )     223  
Prepaid expenses and other current assets   3,787       (3,814 )
Accounts payable   (7,596 )     (18,820 )
Accrued liabilities   584       (11,764 )
Operating lease liabilities   (3,771 )     (3,493 )
Other   (964 )     (1,085 )
Net cash provided by operating activities   124,576       110,547  
       
Investing Activities      
Purchases of property, plant and equipment   (3,179 )     (4,411 )
Other   (978 )     3,800  
Net cash used in investing activities   (4,157 )     (611 )
       
Financing Activities      
Term loan repayments   (75,000 )     (85,000 )
Payments of finance leases   (1,688 )     (1,403 )
Proceeds from exercise of stock options   3,592       9,183  
Fair value of shares surrendered as payment of tax withholding   (5,832 )     (5,508 )
Repurchase of common stock   (37,794 )     (25,000 )
Net cash used in financing activities   (116,722 )     (107,728 )
       
Effects of exchange rate changes on cash and cash equivalents   1,374       (630 )
Increase in cash and cash equivalents   5,071       1,578  
Cash and cash equivalents – beginning of period   46,469       58,489  
Cash and cash equivalents – end of period $ 51,540     $ 60,067  
Interest paid $ 25,551     $ 33,706  
Income taxes paid $ 18,691     $ 25,118  
               
Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Income
Business Segments
(Unaudited)
           
  Three Months Ended September 30, 2024
(In thousands) North American
OTC Healthcare
  International
OTC Healthcare
  Consolidated
Total segment revenues* $ 239,811     $ 43,974     $ 283,785  
Cost of sales   107,782       18,621       126,403  
Gross profit   132,029       25,353       157,382  
Advertising and marketing   34,889       6,520       41,409  
Contribution margin $ 97,140     $ 18,833     $ 115,973  
Other operating expenses           31,634  
Operating income         $ 84,339  
               

*Intersegment revenues of $0.9 million were eliminated from the North American OTC Healthcare segment.

  Six Months Ended September 30, 2024
(In thousands) North American
OTC Healthcare
  International
OTC Healthcare
  Consolidated
Total segment revenues* $ 472,127     $ 78,800     $ 550,927  
Cost of sales   213,341       34,182       247,523  
Gross profit   258,786       44,618       303,404  
Advertising and marketing   68,642       12,132       80,774  
Contribution margin $ 190,144     $ 32,486     $ 222,630  
Other operating expenses           66,245  
Operating income         $ 156,385  
               

*Intersegment revenues of $1.6 million were eliminated from the North American OTC Healthcare segment.

  Three Months Ended September 30, 2023
(In thousands) North American
OTC Healthcare
  International
OTC Healthcare
  Consolidated
Total segment revenues* $ 244,423     $ 41,893     $ 286,316  
Cost of sales   107,466       18,830       126,296  
Gross profit   136,957       23,063       160,020  
Advertising and marketing   35,389       4,713       40,102  
Contribution margin $ 101,568     $ 18,350     $ 119,918  
Other operating expenses           31,668  
Operating income         $ 88,250  
               

*Intersegment revenues of $0.6 million were eliminated from the North American OTC Healthcare segment.

  Six Months Ended September 30, 2023
(In thousands) North American
OTC Healthcare
  International
OTC Healthcare
  Consolidated
Total segment revenues* $ 490,566     $ 75,059     $ 565,625  
Cost of sales   217,542       33,390       250,932  
Gross profit   273,024       41,669       314,693  
Advertising and marketing   66,790       9,543       76,333  
Contribution margin $ 206,234     $ 32,126     $ 238,360  
Other operating expenses           64,916  
Operating income         $ 173,444  
               

* Intersegment revenues of $2.0 million were eliminated from the North American OTC Healthcare segment.

About Non-GAAP Financial Measures

In addition to financial results reported in accordance with GAAP, we disclose certain Non-GAAP financial measures (“NGFMs”), including, but not limited to, Non-GAAP Organic Revenues, Non-GAAP Organic Revenue Change Percentage, Non-GAAP EBITDA, Non-GAAP EBITDA Margin, Non-GAAP Adjusted Net Income, Non-GAAP Adjusted Diluted EPS, Non-GAAP Free Cash Flow, and Net Debt. We use these NGFMs internally, along with GAAP information, in evaluating our operating performance and in making financial and operational decisions. We believe that the presentation of these NGFMs provides investors with greater transparency, and provides a more complete understanding of our business than could be obtained absent these disclosures, because the supplemental data relating to our financial condition and results of operations provides additional ways to view our operation when considered with both our GAAP results and the reconciliations below. In addition, we believe that the presentation of each of these NGFMs is useful to investors for period-to-period comparisons of results in assessing shareholder value, and we use these NGFMs internally to evaluate the performance of our personnel and also to evaluate our operating performance and compare our performance to that of our competitors.

These NGFMs are not in accordance with GAAP, should not be considered as a measure of profitability or liquidity, and may not be directly comparable to similarly titled NGFMs reported by other companies. These NGFMs have limitations and they should not be considered in isolation from or as an alternative to their most closely related GAAP measures reconciled below. Investors should not rely on any single financial measure when evaluating our business. We recommend investors review the GAAP financial measures included in this earnings release. When viewed in conjunction with our GAAP results and the reconciliations below, we believe these NGFMs provide greater transparency and a more complete understanding of factors affecting our business than GAAP measures alone.

NGFMs Defined

We define our NGFMs presented herein as follows:

The following tables set forth the reconciliations of each of our NGFMs (other than Net Debt, which is reconciled above) to their most directly comparable financial measures presented in accordance with GAAP.

Reconciliation of GAAP Total Revenues to Non-GAAP Organic Revenues and related Non-GAAP Organic Revenue Change percentage:

  Three Months Ended
September 30,
  Six Months Ended
September 30,
  2024   2023   2024   2023
(In thousands)                      
GAAP Total Revenues $ 283,785     $ 286,316     $ 550,927     $ 565,625  
Revenue Change (0.9 )%         (2.6 )%      
Adjustments:                      
Impact of foreign currency exchange rates     (165 )       (334 )
Total adjustments     (165 )       (334 )
Non-GAAP Organic Revenues $ 283,785     $ 286,151     $ 550,927     $ 565,291  
Non-GAAP Organic Revenue Change (0.8 )%         (2.5 )%      
                       

Reconciliation of GAAP Net Income to Non-GAAP EBITDA and related Non-GAAP EBITDA Margin:  

  Three Months Ended
September 30,
  Six Months Ended
September 30,
  2024   2023   2024   2023
(In thousands)              
GAAP Net Income $ 54,377     $ 53,559     $ 103,445     $ 106,835  
Interest expense, net   12,281       17,606       25,418       35,325  
Provision for income taxes   17,286       16,856       26,631       32,293  
Depreciation and amortization   7,929       7,643       16,053       15,186  
Non-GAAP EBITDA $ 91,873     $ 95,664     $ 171,547     $ 189,639  
Non-GAAP EBITDA Margin   32.4 %     33.4 %     31.1 %     33.5 %
                               

Reconciliation of GAAP Net Income and GAAP Diluted Earnings Per Share to Non-GAAP Adjusted Net Income and related Non-GAAP Adjusted Diluted Earnings Per Share:  

  Three Months Ended September 30,   Six Months Ended September 30,
  2024
2024
Diluted
EPS
  2023
2023
Diluted
EPS
  2024 2024
Diluted
EPS
  2023
2023
Diluted
EPS
(In thousands, except per share data)                      
GAAP Net Income and Diluted EPS $ 54,377   $ 1.09     $ 53,559   $ 1.07     $ 103,445   $ 2.06     $ 106,835   $ 2.13  
Adjustments:                      
Normalized tax rate adjustment (1)                       (4,030 )   (0.08 )          
Total adjustments                       (4,030 )   (0.08 )          
Non-GAAP Adjusted Net Income and Adjusted Diluted EPS $ 54,377   $ 1.09     $ 53,559   $ 1.07     $ 99,415   $ 1.98     $ 106,835   $ 2.13  
(1) Income tax adjustment to adjust for discrete income tax items.
   

Reconciliation of GAAP Net Income to Non-GAAP Free Cash Flow:  

  Three Months Ended
September 30,
  Six Months Ended
September 30,
  2024   2023   2024   2023
(In thousands)              
GAAP Net Income $ 54,377     $ 53,559     $ 103,445     $ 106,835  
Adjustments:              
Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows   16,045       19,862       30,371       38,050  
Changes in operating assets and liabilities as shown in the Statement of Cash Flows   (622 )     (10,961 )     (9,240 )     (34,338 )
Total adjustments   15,423       8,901       21,131       3,712  
GAAP Net cash provided by operating activities   69,800       62,460       124,576       110,547  
Purchases of property and equipment   (2,027 )     (2,934 )     (3,179 )     (4,411 )
Non-GAAP Free Cash Flow $ 67,773     $ 59,526     $ 121,397     $ 106,136  
                               

Outlook for Fiscal Year 2025:

Reconciliation of Projected GAAP EPS to Projected Non-GAAP Adjusted EPS:

  Low   High
Projected FY’25 GAAP Diluted EPS $ 4.48     $ 4.54  
Adjustments:      
Normalized tax rate adjustment (1)   (0.08 )     (0.08 )
Projected FY’25 Non-GAAP Adjusted Diluted EPS $ 4.40     $ 4.46  
(1) Income tax adjustment to adjust for discrete income tax items.
   

Reconciliation of Projected GAAP Net cash provided by operating activities to Projected Non-GAAP Free Cash Flow:

(In millions)  
Projected FY’25 GAAP Net cash provided by operating activities $ 250  
Additions to property and equipment for cash   (10 )
Projected FY’25 Non-GAAP Free Cash Flow $ 240  


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