Irinquiries@prestigebrands.com
Prestige Consumer Healthcare Inc.
660 White Plains Road – Ste 250
Tarrytown, NY 10591
Telephone: 914-524-6819
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported): August 6, 2020
(Exact Name of Registrant as Specified in Charter)
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
(Address of Principal Executive Offices) (Zip Code)
(914 ) 524-6800
(Registrant's telephone number, including area code)
(Former Name or Former Address, if Changed Since Last Report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| Securities registered pursuant to Section 12(b) of the Act: | ||||||||
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
| Emerging Growth Company | |||||
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
☐
Item 2.02 Results of Operations and Financial Condition.
On August 6, 2020, Prestige Consumer Healthcare Inc. (the “Company”) announced financial results for the fiscal quarter ended June 30, 2020. A copy of the press release announcing the Company's earnings results for the fiscal quarter ended June 30, 2020 is attached hereto as Exhibit 99.1 and incorporated herein by reference.
Item 7.01 Regulation FD Disclosure.
On August 6, 2020, representatives of the Company began making presentations to investors regarding the Company's financial results for the quarter ended June 30, 2020 using slides attached to this Current Report on Form 8-K as Exhibit 99.2 (the “Investor Presentation”) and incorporated herein by reference. The Company expects to use the Investor Presentation, in whole or in part, and possibly with modifications, in connection with presentations to investors, analysts and others during the fiscal year ended March 31, 2021.
By filing this Current Report on Form 8-K and furnishing the information contained herein, the Company makes no admission as to the materiality of any information in this report that is required to be disclosed solely by reason of Regulation FD.
The information contained in the Investor Presentation is summary information that is intended to be considered in the context of the Company's Securities and Exchange Commission (“SEC”) filings and other public announcements that the Company may make, by press release or otherwise, from time to time. The Company undertakes no duty or obligation to publicly update or revise the information contained in this report, although it may do so from time to time as its management believes is warranted. Any such updating may be made through the filing of other reports or documents with the SEC, through press releases or through other public disclosure.
The information presented in Items 2.02 and 7.01 of this Current Report on Form 8-K and Exhibits 99.1 and 99.2 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, unless the Company specifically states that the information is to be considered “filed” under the Exchange Act or specifically incorporates it by reference into a filing under the Securities Act of 1933, as amended, or the Exchange Act.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
See Exhibit Index immediately following the signature page.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Dated: August 6, 2020 | PRESTIGE CONSUMER HEALTHCARE INC. | ||||||||||
| By: | /s/ Christine Sacco | ||||||||||
| Christine Sacco | |||||||||||
| Chief Financial Officer | |||||||||||
EXHIBIT INDEX
| Exhibit | Description | |||||||
| 99.1 | ||||||||
| 99.2 | ||||||||
Exhibit 99.1
Prestige Consumer Healthcare Inc. Reports Fiscal 2021 First Quarter Results
•Revenue was $229.4 Million in First Quarter Fiscal 2021, Down 0.6% from Prior Year Q1 Excluding Unfavorable Foreign Currency
•Diluted EPS of $0.86 in First Quarter Fiscal 2021, up 32% from Prior Year Q1
•Generated Cash from Operations of $75.2 Million and Non-GAAP Free Cash Flow of $72.6 Million in First Quarter Fiscal 2021
TARRYTOWN, N.Y.--(GLOBE NEWSWIRE)-August 6, 2020-- Prestige Consumer Healthcare Inc. (NYSE:PBH) today reported financial results for its first quarter ended June 30, 2020.
“We are pleased with our results for the first quarter which included solid earnings and record free cash flow. We also delivered a stable revenue performance, despite the pandemic, led by the fast-growing eCommerce channel where our investments over the last several years are providing accelerating benefits. Even in an environment where people’s lifestyles, activities and routines have been disrupted by the COVID-19 pandemic, consumers continue to turn to our portfolio of trusted brands,” said Ron Lombardi, Chief Executive Officer of Prestige Consumer Healthcare.
“Our solid start to the year is a testament to our Company’s strong brand positioning and strategic ability to navigate this unique and uncertain business environment. We are protecting the health & safety of our workforce, partners and community all while continuing to execute our time-tested brand-building strategy and maintaining our leading financial profile,” Mr. Lombardi concluded.
First Fiscal Quarter Ended June 30, 2020
Reported revenues in the first quarter of fiscal 2021 decreased 1.2% to $229.4 million, compared to $232.2 million in the first quarter of fiscal 2020. Revenues decreased 0.6% excluding the impact of foreign currency. The revenue performance for the quarter was driven by stable consumption across the majority of the Company’s portfolio and a benefit associated with higher retailer order patterns to refill customer’s supply chains. This was partially offset by reduced consumption for certain brands where the category has been impacted by the COVID-19 virus.
Reported net income for the first quarter of fiscal 2021 totaled $43.7 million versus the prior year comparable quarter’s net income of $33.9 million. Diluted earnings per share of $0.86 for the first quarter of fiscal 2021 compared to $0.65 in the prior year comparable period.
Free Cash Flow and Balance Sheet
The Company's net cash provided by operating activities for first quarter fiscal 2021 was $75.2 million compared to $52.8 million during the prior year. Non-GAAP free cash flow in first quarter fiscal 2021 was $72.6 million compared to $50.8 million in the prior year. The Company’s business experienced continued strong cash conversion from its leading financial profile.
The Company's net debt position as of June 30, 2020 was approximately $1.6 billion and at the end of the first quarter fiscal 2021 the Company's covenant-defined leverage ratio was 4.4x. During the quarter the Company lowered debt outstanding by $111 million as it continued to maintain focus on debt reduction.
Segment Review
North American OTC Healthcare: Segment revenues totaled $210.7 million for the first quarter of fiscal 2021, compared to the prior year comparable quarter's revenues of $210.8 million. The first quarter fiscal 2021 revenue performance was impacted by a reduction in consumption for certain brands where
the category consumption levels have been impacted by the COVID-19 virus, largely offset by a benefit associated with higher retailer order patterns to refill customer’s supply chains.
International OTC Healthcare: Segment fiscal first quarter 2021 revenues totaled $18.7 million, compared to $21.4 million reported in the prior year comparable period. Revenues versus the prior year were impacted by reduced consumption for certain brands impacted by the COVID-19 virus as well as unfavorable foreign currency of approximately $1 million, partially offset by a benefit associated with higher retailer order patterns to refill customer’s supply chains.
Commentary and Outlook for Fiscal 2021
Ron Lombardi, Chief Executive Officer, stated, “We delivered a strong start to the fiscal year, which included first quarter revenues better than anticipated owing to strength from our ongoing brand-building efforts and significant growth in eCommerce channel sales stemming from our long-term investments. The first quarter also experienced strong earnings and free cash flow that were driven by strong EBITDA and the benefit of our disciplined capital allocation strategy over the last year. We reduced debt by $111 million in the first quarter, which resulted in 4.4x leverage, close to the mid-point of our targeted long-term leverage range.”
“As we look forward in the near-term we anticipate revenues in Q2 of $225 million or more. This outlook is driven by continued changes in consumer behaviors and disruptions in certain channels stemming from the COVID-19 virus, which has affected demand in certain categories that we compete in. Despite these challenges, we remain focused on brand-building and maintaining or growing market share across our portfolio of core brands, many of which have unique opportunities for investment in the current environment. Meanwhile, we anticipate Q2 EPS of $0.70 or more, an increase from the prior year, thanks to our disciplined cost management, leading financial profile and benefits of our capital allocation strategy” he continued.
“We continue to refrain from offering full-year guidance given the uncertainties ahead, but we are confident in our sound Company and business strategy that positions us well to withstand these challenges as evidenced in our results announced today. Our leading brand-building efforts, financial profile and disciplined capital allocation approach will enable us to focus on long-term top- and bottom-line growth prospects that position us for continued success,” he concluded.
Fiscal First Quarter 2021 Conference Call, Accompanying Slide Presentation and Replay
The Company will host a conference call to review its first quarter results today, August 6, 2020 at 8:30 a.m. ET. The toll-free dial-in numbers are 844-233-9440 for the U.S. & Canada and 574-990-1016 internationally. The conference ID number is 4482198. 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. The slide presentation can be accessed from the Investor Relations page of the website by clicking on Webcasts and Presentations.
Telephonic replays will be available for approximately one week following the completion of the call and can be accessed at 855-859-2056 within North America and at 404-537-3406 from outside North America. The conference ID is 4482198.
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 "target," "guidance," "strategy," "outlook," "plans," "projection," "focus," "may," "will," "would," "expect," "anticipate," "believe”, "positions," "enables," 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 expectations regarding its ability to withstand challenges from the COVID-19 outbreak including its ability to protect the health and safety of employees, partners and community and its ability to adapt to a changing business environment, future operating results including revenues, the Company’s ability to execute on its brand-building strategy, maintain a leading financial profile, and maintain or grow market share, and the Company’s ability to position itself for continued success. 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 the COVID-19 pandemic and business and economic conditions, the impact of the Company’s advertising and promotional and new product development initiatives, customer inventory management initiatives, fluctuating foreign exchange rates, competitive pressures, and the ability of the Company’s third party manufacturers and logistics providers and suppliers to meet demand for its products and to reduce costs. 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, 2020 and other periodic reports filed with the Securities and Exchange Commission.
About Prestige Consumer Healthcare Inc.
The Company markets and distributes brand name over-the-counter healthcare products throughout the U.S. and Canada, Australia, and in certain other international markets. The Company’s brands include Monistat® and Summer’s Eve® women's health products, BC® and Goody's® pain relievers, Clear Eyes® eye care products, DenTek® and The Doctor's® oral care products, Dramamine® motion sickness treatments, Fleet® enemas and glycerin suppositories, Chloraseptic® sore throat treatments, Compound W® wart treatments, Little Remedies® pediatric over-the-counter products, Efferdent® denture care products, Luden's® throat drops, 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.
Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Income and Comprehensive Income
(Unaudited)
| Three Months Ended June 30, | |||||||||||||||||
| (In thousands, except per share data) | 2020 | 2019 | |||||||||||||||
| Total Revenues | $ | 229,394 | $ | 232,154 | |||||||||||||
| Cost of Sales | |||||||||||||||||
| Cost of sales excluding depreciation | 94,124 | 97,100 | |||||||||||||||
| Cost of sales depreciation | 1,402 | 987 | |||||||||||||||
| Cost of sales | 95,526 | 98,087 | |||||||||||||||
| Gross profit | 133,868 | 134,067 | |||||||||||||||
| Operating Expenses | |||||||||||||||||
| Advertising and marketing | 27,750 | 34,801 | |||||||||||||||
| General and administrative | 19,934 | 21,706 | |||||||||||||||
| Depreciation and amortization | 6,065 | 6,074 | |||||||||||||||
| Total operating expenses | 53,749 | 62,581 | |||||||||||||||
| Operating income | 80,119 | 71,486 | |||||||||||||||
| Other (income) expense | |||||||||||||||||
| Interest income | (24) | (43) | |||||||||||||||
| Interest expense | 21,965 | 25,063 | |||||||||||||||
| Other expense, net | 10 | 416 | |||||||||||||||
| Total other expense | 21,951 | 25,436 | |||||||||||||||
| Income before income taxes | 58,168 | 46,050 | |||||||||||||||
| Provision for income taxes | 14,462 | 12,125 | |||||||||||||||
| Net income | $ | 43,706 | $ | 33,925 | |||||||||||||
| Earnings per share: | |||||||||||||||||
| Basic | $ | 0.87 | $ | 0.66 | |||||||||||||
| Diluted | $ | 0.86 | $ | 0.65 | |||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||
| Basic | 50,264 | 51,697 | |||||||||||||||
| Diluted | 50,808 | 52,047 | |||||||||||||||
| Comprehensive income, net of tax: | |||||||||||||||||
| Currency translation adjustments | 10,590 | (224) | |||||||||||||||
| Unrecognized gain on interest rate swaps | 309 | — | |||||||||||||||
| Total other comprehensive income (loss) | 10,899 | (224) | |||||||||||||||
| Comprehensive income | $ | 54,605 | $ | 33,701 | |||||||||||||
Prestige Consumer Healthcare Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands) | June 30, 2020 | March 31, 2020 | |||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 57,941 | $ | 94,760 | |||||||
| Accounts receivable, net of allowance of $20,106 and $20,194, respectively | 112,324 | 150,517 | |||||||||
| Inventories | 116,811 | 116,026 | |||||||||
| Prepaid expenses and other current assets | 8,488 | 4,351 | |||||||||
| Total current assets | 295,564 | 365,654 | |||||||||
| Property, plant and equipment, net | 58,325 | 55,988 | |||||||||
| Operating lease right-of-use assets | 27,659 | 28,888 | |||||||||
| Finance lease right-of-use assets, net | 5,517 | 5,842 | |||||||||
| Goodwill | 577,128 | 575,179 | |||||||||
| Intangible assets, net | 2,483,051 | 2,479,391 | |||||||||
| Other long-term assets | 2,903 | 2,963 | |||||||||
| Total Assets | $ | 3,450,147 | $ | 3,513,905 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 32,352 | $ | 62,375 | |||||||
| Accrued interest payable | 24,738 | 9,911 | |||||||||
| Operating lease liabilities, current portion | 5,450 | 5,612 | |||||||||
| Finance lease liabilities, current portion | 1,230 | 1,220 | |||||||||
| Other accrued liabilities | 68,159 | 70,763 | |||||||||
| Total current liabilities | 131,929 | 149,881 | |||||||||
| Long-term debt, net | 1,620,641 | 1,730,300 | |||||||||
| Deferred income tax liabilities | 417,230 | 407,812 | |||||||||
| Long-term operating lease liabilities, net of current portion | 23,762 | 24,877 | |||||||||
| Long-term finance lease liabilities, net of current portion | 4,314 | 4,626 | |||||||||
| Other long-term liabilities | 25,257 | 25,438 | |||||||||
| Total Liabilities | 2,223,133 | 2,342,934 | |||||||||
| Stockholders' Equity | |||||||||||
| Preferred stock - $0.01 par value | |||||||||||
| Authorized - 5,000 shares | |||||||||||
| Issued and outstanding - None | — | — | |||||||||
| Common stock - $0.01 par value | |||||||||||
| Authorized - 250,000 shares | |||||||||||
| Issued - 53,939 shares at June 30, 2020 and 53,805 shares at March 31, 2020 | 539 | 538 | |||||||||
| Additional paid-in capital | 490,795 | 488,116 | |||||||||
| Treasury stock, at cost - 3,750 shares at June 30, 2020 and 3,719 shares at March 31, 2020 | (118,865) | (117,623) | |||||||||
| Accumulated other comprehensive loss, net of tax | (33,262) | (44,161) | |||||||||
| Retained earnings | 887,807 | 844,101 | |||||||||
| Total Stockholders' Equity | 1,227,014 | 1,170,971 | |||||||||
| Total Liabilities and Stockholders' Equity | $ | 3,450,147 | $ | 3,513,905 | |||||||
Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended June 30, | |||||||||||
| (In thousands) | 2020 | 2019 | |||||||||
| Operating Activities | |||||||||||
| Net income | $ | 43,706 | $ | 33,925 | |||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 7,467 | 7,061 | |||||||||
| Loss on disposal of property and equipment | 42 | 20 | |||||||||
| Deferred income taxes | 6,147 | 4,206 | |||||||||
| Amortization of debt origination costs | 1,400 | 851 | |||||||||
| Stock-based compensation costs | 1,464 | 1,381 | |||||||||
| Non-cash operating lease cost | 1,831 | 1,338 | |||||||||
| Interest expense relating to finance lease liability | 50 | — | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts receivable | 39,734 | 5,808 | |||||||||
| Inventories | 51 | (8,939) | |||||||||
| Prepaid expenses and other current assets | (4,019) | (4,335) | |||||||||
| Accounts payable | (32,386) | 5,306 | |||||||||
| Accrued liabilities | 11,588 | 7,616 | |||||||||
| Operating lease liabilities | (1,812) | (1,368) | |||||||||
| Other | (109) | (93) | |||||||||
| Net cash provided by operating activities | 75,154 | 52,777 | |||||||||
| Investing Activities | |||||||||||
| Purchases of property, plant and equipment | (2,553) | (1,956) | |||||||||
| Net cash used in investing activities | (2,553) | (1,956) | |||||||||
| Financing Activities | |||||||||||
| Term loan repayments | (56,000) | — | |||||||||
| Borrowings under revolving credit agreement | — | 15,000 | |||||||||
| Repayments under revolving credit agreement | (55,000) | (35,000) | |||||||||
| Payments of finance leases | (336) | — | |||||||||
| Proceeds from exercise of stock options | 1,216 | 275 | |||||||||
| Fair value of shares surrendered as payment of tax withholding | (1,242) | (799) | |||||||||
| Repurchase of common stock | — | (28,766) | |||||||||
| Net cash used in financing activities | (111,362) | (49,290) | |||||||||
| Effects of exchange rate changes on cash and cash equivalents | 1,942 | (19) | |||||||||
| (Decrease) increase in cash and cash equivalents | (36,819) | 1,512 | |||||||||
| Cash and cash equivalents - beginning of period | 94,760 | 27,530 | |||||||||
| Cash and cash equivalents - end of period | $ | 57,941 | $ | 29,042 | |||||||
| Interest paid | $ | 5,571 | $ | 19,966 | |||||||
| Income taxes paid | $ | 2,182 | $ | 1,807 | |||||||
Prestige Consumer Healthcare Inc.
Condensed Consolidated Statements of Income
Business Segments
(Unaudited)
| Three Months Ended June 30, 2020 | |||||||||||||||||
| (In thousands) | North American OTC Healthcare | International OTC Healthcare | Consolidated | ||||||||||||||
| Total segment revenues* | $ | 210,658 | $ | 18,736 | $ | 229,394 | |||||||||||
| Cost of sales | 87,827 | 7,699 | 95,526 | ||||||||||||||
| Gross profit | 122,831 | 11,037 | 133,868 | ||||||||||||||
| Advertising and marketing | 24,680 | 3,070 | 27,750 | ||||||||||||||
| Contribution margin | $ | 98,151 | $ | 7,967 | $ | 106,118 | |||||||||||
| Other operating expenses | 25,999 | ||||||||||||||||
| Operating income | $ | 80,119 | |||||||||||||||
*Intersegment revenues of $1.0 million were eliminated from the North American OTC Healthcare segment.
| Three Months Ended June 30, 2019 | |||||||||||||||||
| (In thousands) | North American OTC Healthcare | International OTC Healthcare | Consolidated | ||||||||||||||
| Total segment revenues* | $ | 210,784 | $ | 21,370 | $ | 232,154 | |||||||||||
| Cost of sales | 88,811 | 9,276 | 98,087 | ||||||||||||||
| Gross profit | 121,973 | 12,094 | 134,067 | ||||||||||||||
| Advertising and marketing | 31,014 | 3,787 | 34,801 | ||||||||||||||
| Contribution margin | $ | 90,959 | $ | 8,307 | $ | 99,266 | |||||||||||
| Other operating expenses | 27,780 | ||||||||||||||||
| Operating income | $ | 71,486 | |||||||||||||||
* Intersegment revenues of $0.8 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 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:
•Non-GAAP Organic Revenues: GAAP Total Revenues excluding impact of foreign currency exchange rates in the periods presented.
•Non-GAAP Organic Revenue Change Percentage: Calculated as the change in Non-GAAP Organic Revenues from prior year divided by prior year Non-GAAP Organic Revenues.
•Non-GAAP EBITDA: GAAP Net Income (Loss) before interest expense, net, income taxes provision (benefit), and depreciation and amortization.
•Non-GAAP EBITDA Margin: Calculated as Non-GAAP EBITDA divided by GAAP Total Revenues.
•Non-GAAP Free Cash Flow: GAAP Net cash provided by operating activities less cash paid for capital expenditures.
•Net Debt: Calculated as total principal amount of debt outstanding ($1,634,000 at June 30, 2020) less cash and cash equivalents ($57,941 at June 30, 2020). Amounts in thousands.
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 Growth percentage:
| Three Months Ended June 30, | |||||||||||
| 2020 | 2019 | ||||||||||
| (In thousands) | |||||||||||
| GAAP Total Revenues | $ | 229,394 | $ | 232,154 | |||||||
| Revenue Change | (1.2) | % | |||||||||
| Adjustments: | |||||||||||
| Impact of foreign currency exchange rates | — | (1,353) | |||||||||
| Total adjustments | — | (1,353) | |||||||||
| Non-GAAP Organic Revenues | $ | 229,394 | $ | 230,801 | |||||||
| Non-GAAP Organic Revenue Change | (0.6) | % | |||||||||
Reconciliation of GAAP Net Income to Non-GAAP EBITDA and related Non-GAAP EBITDA Margin:
| Three Months Ended June 30, | |||||||||||
| 2020 | 2019 | ||||||||||
| (In thousands) | |||||||||||
| GAAP Net Income | $ | 43,706 | $ | 33,925 | |||||||
| Interest expense, net | 21,941 | 25,020 | |||||||||
| Provision for income taxes | 14,462 | 12,125 | |||||||||
| Depreciation and amortization | 7,467 | 7,061 | |||||||||
| Non-GAAP EBITDA | $ | 87,576 | $ | 78,131 | |||||||
| Non-GAAP EBITDA Margin | 38.2 | % | 33.7 | % | |||||||
Reconciliation of GAAP Net Income to Non-GAAP Free Cash Flow:
| Three Months Ended June 30, | |||||||||||
| 2020 | 2019 | ||||||||||
| (In thousands) | |||||||||||
| GAAP Net Income | $ | 43,706 | $ | 33,925 | |||||||
| Adjustments: | |||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities as shown in the Statement of Cash Flows | 18,401 | 14,857 | |||||||||
| Changes in operating assets and liabilities as shown in the Statement of Cash Flows | 13,047 | 3,995 | |||||||||
| Total adjustments | 31,448 | 18,852 | |||||||||
| GAAP Net cash provided by operating activities | 75,154 | 52,777 | |||||||||
| Purchases of property and equipment | (2,553) | (1,956) | |||||||||
| Non-GAAP Free Cash Flow | $ | 72,601 | $ | 50,821 | |||||||
Exhibit 99.2 First Quarter FY 2021 Results August 6th, 2020
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, EPS, G&A and free cash flow; the Company’s ability to adapt to and perform well in the current changing environment, including ensuring the health and safety of employees and maintain business continuity; anticipated inventory reductions; the Company’s ability to manage liquidity, reduce debt and create shareholder value; the expected market share and consumption trends for the Company’s brands, including as a result of the COVID-19 pandemic; and the Company’s disciplined capital allocation strategy. Words such as “trend,” “continue,” “will,” “expect,” “project,” “anticipate,” “likely,” “estimate,” “may,” “should,” “could,” “would,” and similar expressions identify forward-looking statements. Such forward-looking statements represent the Company’s expectations and beliefs and involve a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ materially from those expressed or implied by such forward-looking statements. These factors include, among others, the impact of the COVID-19 pandemic, including on economic and business conditions, government actions, consumer trends, retail management initiatives, and disruptions to the distribution and supply chain; regulatory matters; competitive pressures; unexpected costs or liabilities; the financial condition of our suppliers and customers; and other risks set forth in Part I, Item 1A. Risk Factors in the Company’s Annual Report on Form 10-K for the year ended March 31, 2020. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this presentation. Except to the extent required by applicable law, the Company undertakes no obligation to update any forward-looking statement contained in this presentation, whether as a result of new information, future events, or otherwise. All adjusted GAAP numbers presented are footnoted and reconciled to their closest GAAP measurement in the attached reconciliation schedule or in our August 6, 2020 earnings release in the “About Non-GAAP Financial Measures” section. FIRST QUARTER FY 21 RESULTS 2
Agenda for Today’s Discussion I. Strategic Priorities II. Financial Overview III. Performance Highlights IV.FY 21 Outlook FIRST QUARTER FY 21 RESULTS 3
I. Strategic Priorities FIRST QUARTER FY 21 RESULTS
Strategy in Place for Value Creation ◼ Providing consumers with the brands they know and trust Long-Term Strategy ◼ Strategy and tactics performing well in disrupted environment ◼ Robust continuity plans in the supply chain are working Business Continuity ◼ Investing in inventory has paid off in a challenged supply environment ◼ Pivoted marketing efforts to optimize growth and profitability in current environment Agile Marketing ◼ Benefited from investments in winning channels wherever consumers shop Financial Profile & ◼ Solid financial profile and cash flow generation Cash Flow ◼ Accelerated deleveraging in Q1 Strategic Priorities Remain Intact FIRST QUARTER FY 21 RESULTS 5
II. Financial Overview FIRST QUARTER FY 21 RESULTS
Q1 FY 21 Performance Highlights (0.6%) Revenue of $229.4 million, down slightly vs. PY on an organic basis(1) $229.4 $230.8 12.1% $87.6 $78.1 Solid EBITDA(3) growth of 12.1% due to agile and disciplined financial management 32.0% $0.86 $0.65 EPS of $0.86, up 32.0% vs. PY, validating capital Organic Revenue (1) EBITDA(3) EPS allocation strategy Q1 FY 21 Q1 FY 20 Dollar values in millions, except per share data. FIRST QUARTER FY 21 RESULTS 7
FY 21 First Quarter Consolidated Financial Summary 3 Months Ended Comments ◼ Organic Revenue(1) down slightly vs. PY Q1 FY 21 Q1 FY 20 % Chg Total Revenue $ 229.4 $ 232.2 (1.2%) – Consumption impacted by certain category Gross Margin 133.9 134.1 (0.1%) headwinds related to COVID-19 % Margin 58.4% 57.7% – Triple digit eCommerce growth as consumers A&M 27.8 34.8 (20.3%) continue to shift online % Total Revenue 12.1% 15.0% G&A 19.9 21.7 (8.2%) – Retailer inventory replenishment efforts benefited % Total Revenue 8.7% 9.3% revenue growth, as expected D&A 6.1 6.1 (0.1%) ◼ Gross Margin of 58.4%, up ~70 bps vs. PY Operating Income $ 80.1 $ 71.5 12.1% ◼ % Margin 34.9% 30.8% A&M of 12.1% of Revenue Earnings Per Share $ 0.86 $ 0.65 32.0% – Impacted by changes to marketing programs in (3) EBITDA $ 87.6 $ 78.1 12.1% response to evolving consumer behavior % Margin 38.2% 33.7% ◼ G&A dollars down in Q1 vs. PY ◼ EPS up 32.0% from Q1 FY 20 Dollar values in millions, except per share data FIRST QUARTER FY 21 RESULTS 8
Industry Leading Free Cash Flow Trends Free Cash Flow Comments Q1 FY 21 Q1 FY 20 ◼ Q1 Free Cash Flow(3) of $72.6 million up 42.9% vs. 42.9% PY – Benefited from retailer replenishment efforts $72.6 – Anticipate Q2 Free Cash Flow(3) below PY, expect total H1 above PY $50.8 ◼ Net Debt at June 30 of $1.6 billion(3); leverage ratio(4) of 4.4x at end of Q1 – $111 million debt paydown in Q1 – Over $100 million remaining availability on existing credit lines as of June 30 Free Cash Flow(3) Dollar values in millions FIRST QUARTER FY 21 RESULTS 9
III. Performance Highlights FIRST QUARTER FY 21 RESULTS
Strong Performance through Recent Uncertainty Workforce Supply Base Service Prioritized health & Worked closely with Brands remain safety while staffing suppliers to ensure largely in-stock and appropriately uninterrupted supply well-positioned at key retailers FIRST QUARTER FY 21 RESULTS 11
Adapting Portfolio to Shifts from Pandemic in Real-Time Lower Opportunity Higher Opportunity Various activities Convenience channel Increased focus on Benefit of eCommerce impacted by disruption leading to self-care and hygiene investments as online COVID-19, resulting in fewer incremental at home shift continues lower use occasions purchases FIRST QUARTER FY 21 RESULTS 12
Agile Marketing Strategy to Optimize Portfolio Growth ◼ 3 ways to treat warts at home ◼ Brighten & Whiten ◼ Reallocated event/sponsor spend to digital ◼ 70% who click are new to brand ◼ Click-through rate higher than Google norm ◼ Timely messaging around innovation Marketing Initiatives Aimed at Shifting Consumer Habits FIRST QUARTER FY 21 RESULTS 13
Realizing Benefits of Early eCommerce Investments eCommerce as a % Retail Sales 35%+ exercising at home more often +156% Driving consumers to go beyond ◼ Growing eCommerce trend continued into brushing Q1; accounts for 10%+ of retail sales – Robust growth across all eCommerce partners Monthly site ◼ Long-term focus and heavy investment on eCommerce channel paying dividends visits up 2x versus 2019 ◼ Many brands in portfolio hold market share at or above offline channels FIRST QUARTER FY 21 RESULTS 14
IV. FY 21 Outlook FIRST QUARTER FY 21 RESULTS
Outlook: Staying the Strategic Course to Create Value ◼ Business and strategy remain well-positioned to weather changing environment ◼ Market share largely stable but certain category trends impacted by COVID-19 Top Line Trends ◼ Anticipate inventory reductions in certain channels ◼ Expect international consumption to be affected by consumer pandemic behavior ◼ Anticipate Q2 Reported Revenue of $225 million or higher ◼ Anticipate Q2 EPS of $0.70 or more EPS ◼ G&A to decline vs. PY owing to focused cost management ◼ Anticipate lower Q2 Free Cash Flow(3) versus prior year due to timing Free Cash Flow & ◼ Expect total H1 above PY Allocation ◼ Continue to execute disciplined capital allocation strategy ◼ Proactively managing liquidity and remain focused on debt reduction FIRST QUARTER FY 21 RESULTS 16
Q&A FIRST QUARTER FY 21 RESULTS
Appendix (1) Organic Revenue is a Non-GAAP financial measure and is reconciled to the most closely related GAAP financial measure in the attached Reconciliation Schedules and / or our earnings release dated August 6, 2020 in the “About Non-GAAP Financial Measures” section. (2) Total company consumption is based on domestic IRI multi-outlet + C-Store retail sales for the period ending June 14, 2020, retail sales from other 3rd parties for certain untracked channels in North America for leading retailers, Australia consumption based on IMS data, and other international net revenues as a proxy for consumption. (3) EBITDA, EBITDA Margin, Free Cash Flow and Net Debt are Non-GAAP financial measures and are reconciled to their most closely related GAAP financial measures in the attached Reconciliation Schedules and / or in our earnings release dated August 6, 2020 in the “About Non-GAAP Financial Measures” section. (4) Leverage ratio reflects net debt / covenant defined EBITDA. FIRST QUARTER FY 21 RESULTS 18
Reconciliation Schedules Organic Revenue Growth Three Months Ended June 30, Year Ended March 31, 2020 2019 (In Thousands) GAAP Total Revenues $ 229,394 $ 232,154 Revenue Change (1.2%) Adjustments: Impact of foreign currency exchange rates - (1,353) Total adjustments $ - $ (1,353) Non-GAAP Organic Revenues $ 229,394 $ 230,801 Non-GAAP Organic Revenue Change (0.6%) EBITDA Free Cash Flow Three Months Ended June 30, Year Ended March 31, 2020 2019 Three Months Ended June 30, (In Thousands)Year Ended March 31, 2020 2019 GAAP Net Income $ 43,706 $ 33,925 (In Thousands) Adjustments: GAAP Net Income $ 43,706 $ 33,925 Adjustments to reconcile net income to net Interest expense, net 21,941 25,020 cash provided by operating activities as shown in Provision for income taxes 14,462 12,125 the Statement of Cash Flows 18,401 14,857 Depreciation and amortization 7,467 7,061 Changes in operating assets and liabilities as shown in the Statement of Cash Flows 13,047 3,995 Non-GAAP EBITDA 87,576 78,131 Total adjustments 31,448 18,852 Non-GAAP EBITDA Margin 38.2% 33.7% GAAP Net cash provided by operating activities 75,154 52,777 Purchase of property and equipment (2,553) (1,956) Non-GAAP Free Cash Flow 72,601 50,821 FIRST QUARTER FY 21 RESULTS 19