Prestige Consumer Healthcare Inc. Reports Second Quarter and First Half Fiscal 2025 Results
Revenue of $283.8 Million in Q2, Ahead of Outlook
Diluted EPS of $1.09 in Q2, Up 2% Versus Prior Year
Net Cash Provided by Operating Activities of Approximately $125 Million in First Six Months, Up Approximately 13%; Reduced Debt by $75 Million and Repurchased $38 Million Shares Year-to-Date
Reaffirming Full-Year Fiscal 2025 Revenue, Earnings, and Cash Flow Outlook
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 ContactPhil Terpolilli, CFA,
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
