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Prestige Consumer (PBH) Q4 Earnings & Sales Beat Estimates

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Prestige Consumer Healthcare, Inc. (PBH - Free Report) came out with fourth-quarter fiscal 2019 results, wherein both top and bottom lines surpassed the Zacks Consensus Estimate. Shares of the company gained 2.7% on the better-than-expected results.

While the bottom line grew year over year, sales declined for the fourth straight quarter. Dismal sales trend has caused this Zacks Rank #4 (Sell) stock to fall 14% in a year’s time, underperforming the industry’s decline of 10.9%.



 

Q4 Details

The company posted adjusted earnings of 72 cents per share, up 16.1% from the year-ago quarter’s 62 cents. This upside can be attributed to solid consumption trends at the core brands. Also, the figure surpassed the Zacks Consensus Estimate of 70 cents and marked its fifth consecutive quarter of earnings beat.

Total revenues of $241 million exceeded the Zacks Consensus Estimate of $237 million. Although the top line dropped 5.8% year over year, organic revenues rose 3.2% on the back of robust consumption trends at core categories and changes in revenue accounting policies. We note that organic revenues don’t include the impact of the sale of the Household Cleaning segment and foreign currency movements.

Gross profit came in at $138.2 million, reflecting a decline of 2.1% from the prior-year quarter’s figure. However, gross margin expanded 150 basis points (bps) to 56.9% in the fiscal fourth quarter, primarily driven by the divestiture of the Household Cleaning segment, partly negated by the redesigned BC and Goody’s packaging and certain costs related to the aforementioned divestiture.

Adjusted EBITDA was $83.7 million, down 1.8% year over year, owing to the Household Cleaning segment divestiture. Adjusted EBITDA margin expanded 140 bps to 34.7%.

Segment Performance

Following the divestiture of the Household Cleaning segment on Jul 2, 2018, Prestige Consumer is currently operating two segments — the North American OTC Healthcare and the International OTC Healthcare.

Revenues in the North American OTC Healthcare segment amounted $214.9 million, up 1.3% year over year on the back of increased consumption at core categories and changes in revenue accounting policies.  

Revenues in the International OTC Healthcare segment totaled $26.1 million, up 8.3% from the year-ago quarter. The rise was attributable to increased consumption at core categories, and timing of shipments and distributor orders, which were partly negated by currency headwinds to the tune of $1 million.

Financial Updates

The company exited the quarter under review with cash and cash equivalents of $27.5 million, net long-term debt of $1,798.6 million and shareholders’ equity of $1,095.8 million. Also, the company lowered its debt by $200 million in fiscal 2019. Net cash provided by operating activities in the fiscal year was $189.3 million.

Business Development

Management approved a share repurchase program worth $50 million. Under this plan, Prestige Consumer can buyback shares through May 2020.

 

Prestige Consumer Healthcare Inc. Price, Consensus and EPS Surprise

 

Outlook

Management issued fiscal 2020 guidance, wherein it anticipates growth in product categories to be offset by lower retail inventory and consolidation plans. Owing to these factors, organic growth is projected to be flat year over year in fiscal 2020.

In fiscal 2020, the company expects revenues of $951-$961 million and adjusted earnings per share of $2.76-$2.83. In this regard, the company highlighted that adjusted earnings will be more in the second half of fiscal 2020 due to increased A&P and G&A spending in the first half.  Additionally, free cash flow is forecasted to be $200 million or more in the said period.

Moving on, Prestige Consumer is on track with its three core strategies, and also making efforts to maintain a strong financial profile and maximize capital allocation. Proceeds from capital allocation efforts will enable the company to reduce debt to some extent and repurchase shares up to $50 million.

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Columbia Sportswear Co. (COLM - Free Report) , carrying a Zacks Rank #2, has long-term growth rate of 8.9%.

Under Armour (UAA - Free Report) , with long-term earnings per share growth rate of 20.8%, carries a Zacks Rank #2.

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